Service Tax has been introduced under Finance Act 1994 of Govt. of India. Service Tax is levied whenever any service is rendered.
Person liable to pay:- Service Provider either by himself or can recover from service user on actual receipts of payment but not on ‘accrual’ or ‘due’ basis. But nothing prevents an assessee on paying the the tax on service sooner the bill is raised.
Service Tax may vary depending upon the type of service.
Let me give you a typical example:
Say, for First and Final Bill of a work, the bill amount is = Rs. 100000
Less:-
Security Deposit @ 10% = Rs. 10000
Income Tax @ 2.06% = Rs. 2060
Service Tax @ 2% = Rs. 2000
Cess @ 1% = Rs. 1000
Total Deduction @ 15.06% = Rs. 15060
By Cheque Amount = Rs. 84940
