Service tax

 3. What is a service tax?

A service tax is an indirect tax that the government adds to the price of a service. You pay this extra cost when you buy services like haircuts, phone bills, or hotel rooms. The business collects it from you and sends the money to the government. [1, 2, 3]

In India, this specific tax was replaced by the Goods and Services Tax (GST) in 2017. Before it ended, the maximum service tax rate was 15%. [3, 4, 5]

Think of it like a toll road. The government charges a fee to use the road (or service), and the business acts as the toll booth operator to collect that fee and pass it along to the government. [1, 3]

You can read more about how this tax works and its history on the Wikipedia Service Tax Page or Angel One Service Tax Guide. [3, 6]

[1] https://www.sharekhan.com/financial-blog/blogs/service-tax-what-is-it,-features-example

[2] https://www.tataaia.com/blogs/tax-savings/what-is-service-tax-in-india.html

[3] https://www.angelone.in/knowledge-center/income-tax/service-tax

[4] https://www.edelweisslife.in/blogs/insurance-glossary/what-is-service-tax

[5] https://www.equirus.com/wealth/glossary/service-tax

[6] https://unacademy.com/content/upsc/study-material/commerce/service-tax/