Service Tax

Service Tax

Service Tax

What is it?

  • It is tax on the transaction of providing a service for a consideration. Presently, it is collected on “100” services.

Who pays it?

  • Normally it is to be paid by the service provider. However in certain cases the responsibility is on the service, e.g., service provided by a goods transport agency for transport of goods by road; sponsorship receiver providing service to sponsor; or where the service provider is located outside India.

  • Small service providers are exempt. This category covers any service provider whose turnover was less than Rs.8 lakh in previous year. Tax is payable by such person at normal rate on turnover beyond Rs.8 lakh in this year. To arrive at this amount, turnover of taxable services alone is to be taken.

Tax rate and value of service for computing tax liability?

  • Service tax rate is 12% in addition; “education cess” @ 2% and “secondary and higher education cess” @ 1% is collected in service tax amount. Therefore, total tax rate comes to 12.36% (i.e 12%+3% of 12%).

  • The value for computing tax is the gross amount charged for a service.

Registration of tax payer?

  • Every taxpayer is required to take registration with the Department. Small service providers would take registration on crossing a turnover of Rs. 7 lakh.

  • Application for registration, in “form ST-1” is to be filed with the local central Excise and Service Tax office.

  • Registration is granted within seven days of filling of application.

Records and invoices

  • Records, including computerized records, maintained by taxpayer, in compliance of any other law are acceptable.

  • Service provider would issue invoice/challan/bill within 14 days from providing the service. However, if payment towards service is received in advance the invoice will be issued within 14 days from receipt of such advance.

  • The invoice should be serially numbered and it should contain detail of service provider, receiver of service and the service provided.

Manner of payment

  • Individuals, proprietorship or partnership concerns are required to pay this tax on quarterly basis. All other taxpayers are required to pay it on monthly basis.

  • Tax is to be paid on the value of service received during the month/quarter.

  • Tax for a month/quarter has to be deposited by the 5th (6th in case of electronic payment) of the next month if march/quarter ending March, it is required to be deposited by the 31ST March.

  • It is to be paid on self assessment basis by the taxpayer.

  • It could be deposited in any of the designated banks through a simple challan. The list of designated banks is available at http://pccacbec.nic.in/.

Input stage CENVAT Credit

  • A service provider requires certain goods and services as inputs for providing service to his customer, these inputs may have suffered central excise duty or service tax, the credit of which can be taken by the service provider.

  • This credit is referred to as CENVET credit and it can be utilized by taxpayer for payment of tax on fulfillment of certain conditions.

  • CENVAT credit id not admissible on goods and services used for providing tax free services.

Availability of forms

  • All forms and challan for payment of tax could be downloads from the website of department, www.cbec.gov.in.

  • These forms could also be obtained from the office of commissioner of service Tax/Central Excise.

Can service tax be paid electronically?

  • Yes, it can be paid electronically through the designated banks providing this facility.

  • The list of such banks along worth detailed information on e-payment is available on www.cbec.gov.in and http://pccacbec.nic.in/.

Mandatory e-payment of service tax for certain taxpayers?

  • Any taxpayer who has paid service tax of rupees fifty lakh or above in the preceding year of has already paid service tax of rupees fifty lakh in the current year is required to pay service tax mandatory through internet banking.

Return

  • Return is to be filed twice in a year by everyday taxpayer. For the period from April to September, return has to be filed by the 25th of October and for the period from October to March; it has to be filed by the 25th of April. It is to be filled in form “ST-3”.

Delay in Deposit & Filing

  • Do not delay in depositing tax and filing return, because:

    • Delay in depositing fax attracts interest @ 13% per annum in addition; it also attracts a penalty @ Rs.200 per day of delay or 2% per month of the tax liability. Which ever is higher. This penalty could be up to the amount of service tax payable.

    • Delay in filing of return attracts late fee, which could extend up to Rs.2000.

Services presently Taxable:

Advertising Agency Air Transport of Goods Air Travel Agent
Airport Service Architect Assets Management
Auctioneers Service Authorized Automobile Repair Automated Teller Machine Operation, Management, Maintenance
Banking and other Financial Services Beauty Parlors Broadcasting Service
Business Exhibition Service Business Support Service Cable Operator
Cargo Handling Chartered Accountant Cleaning Service
Clearing and Forwarding Agent Clubs and Associations Commercial Coaching or Training
Company Secretary Consulting Engineer Containerized Rail Transport(other than by Indian Railways)
Convention Services Cost Accountant Courier
Credit Rating Agency Credit/Debit/Charged Cards Custom House Agent
Design Service Development and Supply of Content for Telecom, Advertising and Online Information and Database Retrievable Dredging
Dry Cleaning Erection, Commissioning or Installation Event Management
Fashion Designer Foreign Exchange Broking Forward Contract Brokerage
Franchise Service General Insurance Goods Transport by Road
Health Club and Fitness Centers Insurance Auxiliary Service (Life Insurance) Intellectual Property Service
Interior Decorator International Air Travel (other than Economy-Class) Internet Cafe
Internet Telephony Life Insurance Mailing List Compilation and Mailing Service
Man-power Recruitment and Supply Agency Management, Maintenance or Repair Mandeep Keeper
Market Research Agency Mining of Mineral, Oil or Gas On-line Information and Database Access and/or Retrieval
Opinion/Poll Service Outdoor Catering Service Packaging Service
Pandal and Shamiana Contractor Photography Service Port Service(major Ports)
Port Service(other than major Ports) Public Relation Management Rail Travel Agent
Real Estate Agent/Consultant Recovery Agent Registrar Service to and Issue
Rent-a-Cab Operator Renting of Immovable Property for Commerce and Business Residential Complex Construction
Sale of Space for Advertisement Scientific and Technical Consultancy Security Agency
Share Transfer Agent Ship Cruise Tour Ship Management
Site Preparation Sound Recording Sponsorship
Steamer Agent Stock Broker Storage and Warehousing Service
Survey and Exploration of Minerals Survey and Map-making Technical Inspection and Certification
Technical Testing and Analysis Telecommunication Service Television and Radio Programme Production
Tour Operator Transport through Pipeline Travel Agent
Underwriter Video Tape Production Works Contract Service

CENTRAL BOARD OF EXCISE & CUSTOMS

For more information visit our websites at www.cbec.gov.in, www.servicetax.gov.in

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