Service tax is a tax levied on service providers in India. Service Tax is a form of indirect tax imposed on specified services called "taxable services". Service tax cannot be levied on any service which is not included in the list of taxable services. In the latest budget the service tax has been increased from 10% to 12%.
The provisions relating to Service Tax were brought into force with effect from 1st July 1994. The Finance Minister of India, Mr. P. Chidambaram in his Budget speech has indicated the government's intent of merging all taxes like Service Tax, Excise and VAT into a common Goods and Service Tax by the year 2010. The new services to be covered under Service Tax include ATM operations, maintenance and management, International air travel, Travel on cruise ships, Business support services, Container services on rail, excluding the railway freight charges and many more.