What does service tax entail in India?

Service tax was initially introduced in 1994 and was based on the positive list of services, wherein the specified services were made taxable. During the announcement of the 2012 budget, a new service tax regime was introduced wherein all services will be taxed unless they are specified within the negative list or are otherwise exempted.

All services, except the services that are specified in the negative list of service tax, will be subject to service tax. The negative list is very important because every activity not covered under this list is chargeable to service tax.). However, in addition to items included in the negative list, there may be certain exemption, abatements and composition schemes issued by the Central Board of Excise and Customs (CBEC). The Mega Exemption Notification issued by the CBEC and the guidance paper on the new approach to service tax, mention 38 services that will be service tax exempt. All the other services, except those in the negative list, will be subject to service tax.