Service Tax in India
What is Service Tax?
Service tax refers to tax collected by the government of India from
certain service providers for providing certain services. The person who
pays service tax can be either a service provider or a service receiver
or any other person who is responsible for providing certain services. Service tax is a kind of indirect tax
because the service providers pay the tax and recovers it from the
service receivers who receive or purchase the taxable services. It is a
kind of tax that you pay to the government for enjoying different
services received from various service providers.
Service Tax in India:
Service tax in India came into effect in 1994 following the Finance
Act, 1994. It is imposed on certain services which are taxable under the
section 65 of Finance Act, 1994. The budget 2012 increased the range of
services included under service tax. It incorporated services such as
service provided by AC restaurants, short and long term lodging offered
by hotels and private guest houses etc. under taxable services. As per
this new regulation, service tax is charged from individual providers as
well as companies in India. Individual service providers can pay this
tax via cash while companies can pay it on accrual basis. However, they
need to pay this tax only if the value of services provided by them
exceeds Rs. 10lakh in a single financial years. However, this new
additions to service tax rules are not applicable to the state of Jammu
& Kashmir. From the year 2012 onwards, all services, except the ones
specified in the “negative list” of services, become liable for service
tax. The negative list refers to the services listed in section 66D of
the Finance Act, 1994.
Service Tax Rules:
As per the Finance Act, 1994, the government of India creates a set
of rules in order to assess and collect service tax in India. Listed
below are the rules applicable to service tax in India:
Rule 1: Short Title and Commencement:
- The rules created to assess service tax may called as Service Tax Rules, 1994.
- They came into effect from 1st July, 1994.
Rule 2: Definitions:
- This category of rules includes the definitions of various terms such as “Act”, “assessment” “personal liable for paying service tax” etc. Act refers to the Finance Act, 2014, “assessment” refers to the self-assessment of service tax by the assessee, provisional assessment and reassessment, and "personal liable for paying service tax" refers to the recipient of service.
- It also includes definition of "quarter" "security services" "renting of immovable property" etc. Quarter refers to the period between 1st January to 31st March or 1st April to 30th June; or 1st July to 30th September; or 1st October to 31st December of a single financial year. “Renting of immovable property” refers to services provided by renting of immovable property and “security services” refers to services relating to the security and property.
Rule: 3 Appointment of Officers:
- As per this rule, the Central Board of Excise and Customs can appoint central excise officers.
Rule 4: Registration:
- Every service provider who is liable to pay service tax shall apply for registration by using the application Form ST - 1 within 30 days from the date on which service tax is charged. This is very essential.
Rule 4 (A): Information about Taxable Services To Be Provided on Bill, Invoice Or Challan
- Every service provider offering taxable services will issue an invoice or a bill or a challan signed by him or by another person authorized by him which will contain the basic information such as name, address and registration number of the service provider; name and address of the service recipient; description and cost of taxable service provided and the amount of service tax to be paid.
Rule 4 (B): Consignment Note:
- Any service provider that provides services related to transportation of goods should issue a consignment note.
Rule 5: Records:
- Any records containing computerized data maintained and produced by an assessee according to different existing laws shall be accepted by Central Board of Excise and Custom.
Rule 5 (A): Access to Registered Premises:
- As per this rule, any officer authorized by the commissioner shall have access to any premises in order to complete scrutiny and verification required to protect revenues.
Rule (6): Payment of Service Tax:
- As per this rule, the service tax will be paid to the credit of the central government by the 6th of every month, if paid electronically and 5th of every month, if paid via other means.
Rule 6 (A) Export of Services:
- It includes the situations under which any services shall considered as export of services. If the provider of service is located in the taxable territory and the recipient is located outside India, the service shall be considered as export of service.
Rule 7: Returns:
- Every service provider shall submit a half yearly return in Form ST-3 or ST-3A together with a copy of the Form TR-6 filled in triplicate by 25th of the month following the half year.
Rule 7 (A) Returns for taxable services provided by transport operators:
- Services/goods provided by transport operators shall also furnish a return within a period of six months from the 13th May of 2003, failing which will lead to penalty.
Rule 7 (B) Revision of Return:
- As per this rule, an assessee can submit a revised return in Form ST-3 to modify or correct any mistakes within 90 days from the date of submission of return.
Rule 7 (C): Amount to be paid for delay in furnishing returns:
- An amount of Rs.500 needs to be paid to the credit of the central government, if you fail to furnish your return within 15 days from the prescribed date of submission. If it gets delayed by more than 15 days, you need to pay Rs. 1000. If it extends beyond 30 days, you need to pay Rs. 1000 plus Rs.100 per month till the date you finally furnish your returns.
Rule 8: Appeal to Commissioner of Central Excise:
- You can appeal to Commissioner of Central Excise in Form ST - 4 under section 85 of the Finance Act, 1994.
Rule 9: Form of Appeals to Appellate Tribunal:
- You can appeal to the Appellate Tribunal under section 86 of the Finance Act, 1994 by using Form ST-5.
Rule 10: Facilities and Procedure for Large Taxpayers:
- This section of rules include the provisions enjoyed by the large taxpayers. A large taxpayer shall submit returns for each of their registered premises. They may also be required to produce all financial records for verification and security when required.
Service Tax Rates In India:
There is an increase in the rate of service tax in India following
the recent announcement made by the finance minister Arun Jaitley in
budget 2015. The budget decides to increase the rate of service tax to
14% from its previous rate of 12, 36%. However, this revised rate of
service tax will include Education Cess’ and ‘Secondary and Higher
Education Cess’ in it. It is expected that this rise in service tax rate
will increase the cost of restaurant bills and mobile bills for common
people. The government of India took this move to levy tax smoothly on
the services provided by both states and the centre. Beside, another
provision is included in the Finance Bill, 2014 to levy a “Swachh Bharat
Cess” at 2% on all or select taxable services in India.
How to Pay Service Tax In India?
You can pay service tax by using a G.A.R -7. This is a challan
available in specified branches of particular banks. You need to fill
the challan by putting all required information and submit it at your
particular bank. However, you can also pay your service tax online by
using the e-payment facility offered by the central Board of Excise and
Custom. For e-payment, it is mandatory to have an internet banking
account with any of the authorized banks.
Previously service tax was charged on cash basis from all service
providers. But, now only individual providers have pay tax on cash
basis. Companies have to pay it on accrual basis. They need to deposit
tax as soon as they offer services to recipients. Service tax can be
paid on quarterly basis by individuals and partnership firms. But,
companies, society and trusts need to pay service tax on monthly basis.
How to File Service Tax Returns?
Usually, a service tax assessee needs to file two type of returns -
ST-3 Return and ST-3A Return. ST-3 Return is applicable for registered
assessee. ST-3A Return is applicable for those who make provisional
assessment under rule 6(4) of the Service Tax Rules, 1994. You need to
file ST-3 Return twice in a financial year on half yearly basis. You can
file your service tax returns by furnishing the details of each month
for which the return is filed. You need to furnish these details
separately with Form ST-3. While filing your service tax returns, you
can take the help of instructions stated in the application form. Your
application form needs to be accompanied by a GAR-7 challan.
If you want to file your service tax returns online, first you need
to register with ACES (Automation Central Excise and Service Tax) by
visiting website of Central Board of Excise and Custom. Once, you
register, the site will send you an user ID and password by using which
you can log in to the site of central Board of Excise and Custom and get
access to FORM ST-1. Then, fill up the online form by putting all
required information and make an e-payment by using your chosen bank.
You can also revise your service tax returns in order to correct an
error or omit something. If you fail to file your returns within 15
days, from the prescribed due date of returns, you need to pay a penalty
fee of Rs. 500. But, the penalty fee increases, if service tax returns
get delayed beyond that.
Service Tax Penalties:
As per the provisions made under Sections 76, 77 and 78 of Finance
Act, 1994, the central government may charge penalty, if you fail to
meet the following conditions:
- If you fail to furnish the ST-3 Return within the due dates which are 25th October and 25th April of every year. In that case, you will be liable to pay penalty fee which may extend up to Rs. 2000 based on the period of delay.
- If a person fails to furnish information or appear before the Central Excise Officer when called for, he/she shall have to pay penalty up to Rs. 5000 or Rs. 200 per day after the due date, whichever is higher.
- If you are a service provider and fail to register your service, it will draw penalty as per the regulations mentioned in section 77 of the Finance Act, 1994 and the penalty fee may go up to Rs. 5,000. Because, registration serves as an identity of an assessee and it is mandatory to register your services.
- If an assessee fails to keep or maintain records of account and other documents required by service tax law, he/she shall be liable to pay penalty fee which may go up to Rs. 5,000.
- If a person fails to pay tax electronically, he/she shall to pay penalty which may extend up to Rs. 5,000.
- Penalty fee is also charged on non-payment or delayed payment of service tax.
- Penalty shall be charged up to Rs. 5000, if a person issues an incorrect invoice or fails to support his invoice with valid details.
- Penalty shall be charge if a person suppresses the value of taxable services or provides willful miss-statement about the service provided.
Not only there are provisions for imposing penalty if you fail to
meet the above mentioned criteria, there are also provisions for not
imposing penalty in the service tax rules. As per section 80 of the
Finance Act, 1994, if a person can provide sufficient cause to support
his failure to pay service tax, he/she can be exempted from paying
penalty fees. However, insufficient funds or lack time are not
considered as adequate causes to waive penalty.
What are the Exemptions Under Service Tax In India?
Normally, service tax is paid on all services except for those
included in the negative list of services. All service providers
including central and state government service providers as well as
private sector service providers are liable to pay service tax. However,
there are a few exceptional scenarios wherein service providers can
avoid paying service tax. Listed below the major exemptions:
- A small scale or individual service provider can enjoy service tax exemption, if its total turnover of taxable services does not go beyond Rs. 10 lakhs in a single a financial year.
- The recipients are exempted from paying service tax for the goods and services received from the service provider, if there is written proof indicating the value of the goods and materials and no credit of duty is paid on such goods and materials, and if the services have been rendered under the CENVAT Credit rules.
- Service tax is not applicable to the services provided to diplomatic missions and to the officers a diplomatic mission and their family members.
- Services such as port services, goods transport services and containerised transport services received by an exporter and used for export of goods are not taxable. In such cases, service tax paid by an exporter on the above mentioned situations is refunded to the exporter.
- Services provided to international organizations and the United Nations are not taxable.
- Service tax is not applicable to the services provided to a developer of Special Economic Zone or a unit of Special Economic Zone.
FAQs:
- Who is liable to pay service tax in India?
Any firm, company or individual who provides services which are not included in the list negative things is liable to pay service tax. - What kind of tax is service tax?
Service is a kind of indirect tax which the recipient of various services pay indirectly to the government via service providers. - Can I pay my service tax online?
Yes, you can pay your service tax online by visiting the website of Central Board of Excise and Custom. For that, you need to have an internet banking account. - Do I need to pay penalty fees, if I don’t pay my service tax on time?
Yes, penalty will imposed on you, if your fail to pay tax on time. - What is G.A.R -7?This is a challan by using which you can pay service tax manually. The challan is available in particular authorized banks.
Service Tax Forms
Download Service Tax forms, which you can Fill before Print.
| Form No. / Link | Description | Format |
|---|---|---|
| Form GAR 7 | Proforma for Service Tax Payment | Excel |
| Form ST 1 | Application form for registration under Section 69 of the Finance Act, 1994 (32 of 1994) | Excel |
| Form ST 2 | Certificate of registration under Section 69 of The Finance Act, 1994 (32 of 1994) | Excel |
| Form ST 3A | Memorandum for provisional deposit under rule 6 of the Service Tax Rules, 1994 | Word |
| Form ST 4 | Form of Appeal to the Commissioner of Central Excise (Appeals) under section 85 of the Finance Act,1994 (32 of 1994) | Word |
| Form ST 5 | Form of Appeal to Appellate Tribunal under section 86 of the Finance Act, 1994 ( 32of 1994 ) | Word |
| Form ST 6 | Form of memorandum of cross objections to the Appellant Tribunal under section 86 of Finance Act, 1994 (32 of 1994) | Word |
| Form ST 7 | Form of application to Appellate Tribunal under Section 86(2) {or Sec.86(2A) of the Finance Act, 1994 (32 of 1994)] | Word |
| Form AAR (ST) | Application for Advance Ruling (Service Tax) | Word |
| Form ASTR 1 | Application for filing a claim of rebate of service tax and cess paid on taxable services exported | Word |
| Form ASTR 2 | Application for filing a claim of rebate of duty paid on inputs, service tax and cess paid on input services | Word |
| Form TR 6 | For payment of Service Tax (Challan) | Word |
| VCES forms | Forms under Service Tax Voluntary Compliance Encouragement Rules, 2013 - VCES-1 (Declaration), VCES-2 (Acknowledgement) and VCES-3 (Discharge) forms. | Excel |
| Form A-1 | Declaration by the SEZ Unit or Developer for availing ab initio exemption under notification No.12/2013 dated 01/07/2013 | Excel |
| Form A-3 | Quarterly return to be furnished by the SEZ Unit/Developer under notification No.12/2013 dated 01/07/2013 | Excel |
| Form A-4 | Application for claiming refund of service tax paid on specified services used for authorised operations in SEZ under notification No.12/2013 dated 01/07/2013 | Excel |
| e - Application | Application for Permission to file ST3 Returns Elecronically | Word |
About forms :-
- The forms can be downloaded for free by users of this site for their personal use. The forms are not available for publishing on any web site / blog.
- The forms compiled in Excel format are protected by password to prevent accidental deletion of inbuilt formulas and to check their unauthorized publication. The password of the forms will not be shared with any person.
- Report of any errors / omissions in forms will be promptly attended to. Other requests will be entertained on merits.
- The forms are amended on an ongoing basis to
- Remove errors / omissions noticed by us / advised by the users of forms.
- Incorporate changes made in the forms by the form issuing departments / agencies.
- Make the form more user friendly.
No comments:
Post a Comment