SERVICE TAX
Introduction
Service Tax was introduced in 1994 vide Finance Act,
1994 with 3 SERVICES namely, Brokerage charged by
stockbroker, Telephone services & premium on
General Insurance Services.
Applicable to whole of India except Jammu &
Kashmir.
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What is service tax ?
It is a tax levied on the transaction of certain
Specified Services, by the Central Government under
the Finance Act, 1994.
It is an Indirect Tax, which means that normally the
service provider pays the tax and recovers the
amount from the recipient of taxable service.
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Who is liable to pay Service Tax?
Generally, the ‘Person’ who provides the taxable service
(on receipt of service charges) is responsible for paying
the Service Tax to the Government except the
following:
i.The recipient of services in India is liable to pay Service
Tax, where taxable services are provided by Foreign
Service providers with no establishment in India;
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ii. The Service Tax is to be paid by the Insurance Company for
the services in relation to Insurance Auxiliary Service by an
Insurance Agent.
iii. The person who pays or is liable to pay freight for the taxable
services provided by a Goods Transport Agency for transport
of goods by road, 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 cooperative society (f) a registered dealer of excisable
goods (g) a body corporate or a partnership firm.
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iv. The taxable services provided by Mutual Fund
Distributors in relation to distribution of Mutual Fund.
In this regard, Service Tax is to be paid by the Mutual
Fund or the Asset Management Company receiving
such service.
v. In case the service provided by a person falls within the
scope of the taxable services and if such service is not
fully exempted, the service tax is payable on the value
of the taxable service received subject to the eligible
abatements, if any.
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Assessee
Who is an ‘Assessee’ in relation to Service Tax?
‘Assessee’ means a person liable to pay Service
Tax and includes his agent. As per Section 69,
every person liable to pay service tax has to
get themselves registered with service tax
authorities
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Registration
Application for registration in Form ST-1 to be made
to concerned Superintendent of Central Excise.
The application for registration shall be made within
30 days, from the date on which the levy of service
tax is brought into force in respect of the relevant
services or of the commencement of business where
services has already been levied .
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Registration Certificate is granted in Form ST-2 within 7
days In case the registration certificate is not issued within
seven days, the registration applied for is deemed to have
been granted. (Rule 4(5) of the STR, 1994)
It is compulsory for every assessee to obtain the Service Tax
Code number which is a 15 digit alphanumeric no. based on
the PAN
Assessee providing more than one taxable service should
mention in single application, all the taxable services
provided by him.
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Provision for Centralized Registration
Service providers having centralised accounting or
centralised billing system, at their option, can have
Centralised registration at one or more places.
Commissioner of Central Excise / Service Tax in
whose jurisdiction centralised account or billing
office of the assesses exists, is empowered to grant
centralised registration.
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Exemption Scheme for
Small Service Providers
Central Government, provides the basic exemption to the
service providers whose aggregate value of taxable
services provided in last financial year is less than Rs. 10
Lakhs.
Assessee should not charge the Service Tax if he/she is
claiming the benefit of exemption. If charged by mistake
the same should be refunded to the service receiver.
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Other Exemptions
Services provided to United Nations &
International Organizations.
Services provided to developer of SEZs or units
of SEZs
Services provided to Diplomatic Missions.
Services provided by RBI
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Services provided by Incubators (used to maintain
a constant temperature) are exempt from service
tax.
Services provided by digital cinema service
provider to producer/ distributor in relation to
delivery of content of Cinema in Digital Form are
exempt from service tax.
Value of goods and materials sold by service
provider are exempt.
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Abatement
In case of certain services, the benefit of abatement
(rebate) is allowed to the service provides. In such cases,
the service providers charges tax from the client after
taking into account the abatement available or on net
amount (net of abatement).
Example: if invoice for servicing is to be raised for Rs.
1000/- and abatement of 60% is available then service
tax will be imposed only on Rs. 400/- [1000-60% of
1000].
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Payment of Service Tax
Other than
Individual/Firm
Individual/Firm
Quarterly Monthly Payment
Payment
I, II & III IV Quarter Ending Months Month of
Quarter on 31st March Apr - Feb March
5th of the 5th of the Up to 31st
Up to 31
st
Month Next Month March
March
following
Quarter
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How to file Service Tax Returns?
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