Service Tax is a create of contingent tax imposed on precise benefits named "taxable benefits". Benefit tax cannot be levied on any benefit which is not interposed in the register of taxable benefits. Over the late few years, benefit tax been remote to meet new benefits. The external following levying benefit tax is to weaken the appoint of eagerness of taxation on manufacturing and occupation externally forcing the synod to involve on the fruits needs. The guile of the synod is to gradually acception the register of taxable benefits until most benefits lapse among the occasion of benefit tax.
For the design of levying benefit tax, the treasure of any taxable benefit should be the entire totality charged by the benefit provider for the benefit rendered by him. Benefit Tax was foremost brought into soundness delay result from 1 July 1994. All benefit providers in India, ate those in the say of Jammu and Kashmir, are required to pay a Benefit Tax in India. Initially singly three benefits were brought subordinate the net of benefit tax and the tax trounce was 5%. Gradually more benefits came subordinate the ambit of Benefit Tax.
The trounce of tax was acceptiond from 5% to 8% w. e. f 14 May 2003. From 10 September 2004 the trounce of Benefit Tax was enhanced to 10% from 8%. Besides this 2% direction cess on the totality of Benefit Tax was as-well introduced. In the Union Budget of India for the year 2006-2007, benefit tax was acceptiond from 10% to 12%. On February 24, 2009 in appoint to grant release to the diligence faltering subordinate the application of economic recession, The trounce of Benefit Tax was weakend from 12 per cent to 10 per cent.