15. Explain briefly key factors that determine whether a service is taxable.
Whether a service is taxable depends on the Goods and Services Tax (GST) rules. Four key factors decide if a service is taxable: [1]
1. Is there a "Supply"?
To be taxable, there must be a clear supply of a service. The provider must do something for someone else. Doing a personal favor for no charge is not taxable. [2, 3, 4]
2. Is there a "Consideration"?
The service must have a price. The receiver must pay for it with money, goods, or promises. Free services, gifts, and charity work are usually not taxable SERVICE TAX – THE NEW SYSTEM OF TAXATION OF ... - CAAA. [3, 5, 6, 7, 8]
3. Is it in the "Taxable Territory"?
The service must happen in a place where the tax law applies Service Tax. For example, services in India Goods and Services Tax: What is GST in India? Indirect Tax Law ... are taxable, but services exported to other countries are generally zero-rated. [9, 10, 11]
4. Is the Service "Exempt"?
Some services are exempt When is Service Tax Not Applicable?. The government decides these do not get taxed What is Service Tax? Meaning & Definition. Examples include basic healthcare and education What is Service Tax? Meaning & Definition . [9, 10, 12]
If a service meets the first three rules and is not exempt, the government will tax it based on its category Types of Services Under the GST & their tax implications . [13, 14]
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