The provision for imposing service tax on services rendered by various professional groups was introduced in the general budget.

The rate of service tax will be 5 per cent for all services except in case of services rendered by mechanised slaughter houses. Services of slaughtering bovine animals rendered be mechanised slaughter houses shall attract a service tax of Rs 100 per animal.

Service tax, however, shall be fully exempted on all taxable services rendered in India is respect of overseas projects for which payment is made in convertible foreign exchange. The service tax has been exempted on taxable services other than of auditing and accounting provided by practicing chartered accountants.

Servicetax has also been exempted on taxable services provided by security agency in relation to the services of providing safe deposit lockers or security or safe vaults for security of movable property. Meanwhile, the government has also amended the Service Tax Rules 1994 to further simplify the procedure pertaining to collection and payment of service tax. Service tax return will now be required to be filed only on a half yearly basis (instead of the existing requirement of filing quarterly return) by 25th of the month following the particular year.

Also the rules have been amended to provide for payment of service tax by individuals and proprietary or partnership concerns on a quarterly basis (instead of the existing monthly basis). Other categories of service tax assesses shall continue to pay service tax on a monthly basis. Service tax payments in respect of a particular quarter or month, as the case may be, is required to be made by 25th of the month following the particular quarter of the month.

Thefacility of centralised registration and payment of service tax has been extended in cases where the service tax assesses are having a centralised billing system. Another major simplification is the facility of allowing suo-moto adjustment of service tax by the service tax payer which may have been paid in excess earlier. Also the service tax will be required to be paid only on the value of taxable services received in a particular month or quarter and not on the gross amount charged or billed to the client subject to the condition that the service tax assesses revises his earlier bill which may be of a higher amount.

These relaxations, according to an official press note, is expected to encourage voluntary compliance of service tax by adopting an assesses friendly approach.