OverviewThis functionality is specific for India. Service tax is a central tax. Service tax is an indirect tax, paid for providing certain types of services. This tax is applicable to all states in India except Jammu and Kashmir. Service tax is applicable only if the service location is in India. The tax authorities issue a separate registration number for service tax. If the service provider is operating from different locations, a separate registration number must be obtained for each location. Service tax can apply in combination with other taxes. The possible tax combinations are the following:
It is usually allowed to settle payable service tax with claimable service tax, and only pay the difference. Tax calculation Important! In LN, Service Tax is set up as a form of Sales Tax. For a service tax code, kind of tax must be 'VAT' and when both material and labour components are present, two order lines must be created. Therefore, if Service Tax and Central or Value Added Tax (VAT) apply to a service invoice, you must create separate invoice lines for the amount to which the Value Added Tax (VAT) applies and the amount to which Service Tax applies. Service tax is due on invoice amounts. You are liable for Service tax on delivered services on sales invoices and advance receipts. You can charge this tax to your customers. Service tax on received services applies to purchase invoices and advance payments. You can settle payable Service tax with paid Service tax, Excise, and Import duties. In addition to Service Tax, Tax Deducted at Source (TDS) can also apply to purchase invoices and advance payments for received services. For details, refer to Tax deducted at source (TDS) - overview. Example: The invoice amount of the service is 1000. The service tax calculation is displayed in the following table:
Payment of the tax amount You can pay the tax by standing order or manually by means of a journal voucher. For details, refer to To pay the tax declaration.
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