Service Tax : General Information

Service

'Service' has been defined in clause (44) of the new section 65B and means - any activity for consideration carried out by a person for another and includes a declared service. The said definition further provides that 'Service' does not include -

  • any activity that constitutes only a transfer in title of goods or immovable property by way of sale, gift or in any other manner
  • a transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of article 366 of the Constitution
  • a transaction only in money or actionable claim
  • a service provided by an employee to an employer in the course of the employment.
  • fees payable to a court or a tribunal set up under a law for the time being in force

Service Tax

Service tax is, as the name suggests, a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government under the Finance Act, 1994. It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally, the service provider pays the tax and recovers the amount from the recipient of taxable service.

Prior to 1.07.2012, Service tax was levied on specified services.

From 01.07.2012, there is a paradigm shift in the levy of service tax. The service tax has been imposed on all services other than those specified in the negative list.

Liability to pay service tax

Normally, the person. who provides the taxable service on receipt of service charges is responsible for paying the Service Tax to the Government. However, in the following situations, the receiver of the Services is responsible for the payment of Service tax :

  1. Where taxable services are provided by foreign service providers with no establishment in India , the recipient of such services in India is liable to pay Service Tax.
  2. For the services in relation to Insurance Auxiliary Service by an Insurance Agent, the Service Tax is to be paid by the Insurance Company
  3. For the taxable services provided by a Goods Transport Agency for transport of goods by road, the person who pays or is liable to pay freight is liable to pay Service Tax , if the consignor or consignee falls under any of the seven categories viz. (a) a factory (b) a company (c) a corporation (d) a society (e) a co-operative society (f) a registered dealer of excisable goods (g) a body corporate or a partnership firm.
  4. For the taxable services provided by Mutual Fund Distributors in relation to distribution of Mutual Fund the Service Tax is to be paid by the Mutual Fund or the Asset Management Company receiving such service.

Rate of Service Tax

From 01.06.2016 onwards, Rate of service tax is 14% + 0.5% Swatch Bharat Cess + 0.5% Krish Kalyan Cess (aggregating to 15%).

Registration

Every person who has provided a taxable service of value exceeding Rs. 9 lakhs, in the preceding financial year, is required to register with the Central Excise or Service Tax office having jurisdiction over the premises or office of such service provider. In case a recipient is liable to pay service tax he also has to obtain registration.

For registration, Form ST-1 (in duplicate) is required to be submitted before the jurisdictional Central Excise/Service Tax officer. To verify the correctness of declaration in the said form, certain documents such as copy of PAN card, proof of address of business premise(s), constitution of the business [proprietorship, firm, company, trust, institute etc.] etc. may be required by the registering authority. The copies may be self-certified by the applicant. In case of doubts in select cases, original documents may have to be presented for verification.

The Registration certificate is issued within a period of seven days from the date of submission of application ST-1 along with all relevant details/documents.

Penal provision for non-registration

Failure of registration may attract a penalty upto Rs.10000/- or Rs. 200/- for every day during which such failure continues, whichever is higher. However, such penalty may be waived in case the assessee proves that there was reasonable cause for such failure.

Payment of Service Tax

Form G.A.R.7 should be used to make service tax payments. Payment of service tax may be made at the specified branches of the designated banks. Service Tax can also be paid electronically, using e-payment facility.

E-payment is mandatory for assesses who have paid service tax of Rs.10 lakhs or more including the amount paid by utilization of CENVAT credit, in the preceding financial year. However, there is no bar for other assessees to pay their tax electronically.

Periodicity of Payment

CategoryFrequencyDue Dates

Individuals,
Proprietary Firms &
Partnership Firms
Quarterly as mentioned below -
  1. For quarter ending 30th June
  2. For quarter ending 30th Sept.
  3. For quarter ending 31st Dec.
  4. For quarter ending 31st March

  1. - by 5th July
  2. - by 5th October
  3. - by 5th January
  4. - by 31st March
Others (e.g. Companies, Societies, Trusts etc.)MonthlyBy 5th of the month immediately following the month in which payments are received towards the value of taxable services. However, in case of March, the payment should be made by 31st March.

Failure to Pay Service Tax

Every person, liable to pay the service tax in accordance with the provisions of section 68 of the Act or rules made there under, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest @18% per annum. Interest is payable for the period from the first day after the due date till the date of payment of any defaulted service Tax amount. Interest payments are mandatory in nature and the same cannot be waived.

Further, if a person who is liable to pay Service Tax fails to pay service tax, he shall pay in addition to such tax and interest, a penalty which shall not be less than Rs.100/- for every day during which such failure continues or @1% of such tax per month, whichever is higher. However, the penalty amount payable shall not exceed the amount of Service Tax payable.

Filing or Returns

ST - 3 Return - By all the registered assessee, including Input Service Distributors

ST - 3A Return - By The assessees who are making provisional assessment under rule 6(4) of the Service Tax Rules, 1994.

ST - 3 Return is required to be filed half yearly. Return for half year ending 30th September and 31st March are required to be filed by 25th and October and 25th April, respectively.

With effect from 25th August, 2011 in terms of Notification No. 43/2011 all Service Tax returns are to be filed electronically.

Procedure to E-file Service Tax Return

  1. File an application to the jurisdictional Asst./Deputy Commissioner of ServiceTax, specifying -
    • 15-digit PAN based registration number (STP Code)
    • Valid e-mail address - so that the Department can send them their User ID and password to help them file their Return.
  2. Log on to the Service Tax e-filing home page by typing the address https://servicetaxefiling.nic.in in the address bar of the browser.
  3. Upon entering the Service Tax code, user ID and password, you will be permitted to access the e-filing facility.
  4. Follow the instructions given therein for filing the Returns electronically.
  5. Obtain the acknowledgement.

Penalty for Late filing of Return

Period of Delay from the prescribed datePenalty
15 days Rs.500/-
Beyond 15 days but not later than 30 daysRs.1000/-
Beyond 30 daysRs.1000/- plus Rs. 100/- for every day from the thirty first day till the date of furnishing the said return (not exceeding Rs.20000)
For further details / clarifications / queries, please visit https://www.servicetax.gov.in/

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