The Service Providers, engaged in rendering services chargeable to service tax at times gets veryService tax services for individuals and partnerships confused with the compliance requirements, as they dont have the knowledge infrastructure required to comply with requirements of law.

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FAQ on “Service Tax”

What is Service Tax and who is liable to pay Service Tax?

Service tax is 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. Service Tax is an indirect tax and the company who provides the taxable service on receipt of charges is responsible for paying the Service tax to the Government.

Who is liable to pay Service Tax in case service is provided by a Non- resident or who does not have any establishment in India?

Services receiver in India is liable to pay Service Tax in case service is provided by a Non- resident or who does not have any establishment in India.

What are the taxable services?

As per the latest amendment in the Finance Act, the Central Government has recognised 119 services along with their accounting heads as taxable in India. These accounting heads are needed to be mentioned on the tax payment documents (GAR – 7 or TR – 6), while depositing service tax and other related dues in the banks.

What is the rate of Service Tax?

At present the rate of Service Tax is 10 % to be levied on the “gross value of taxable service”. In addition to this, Education Cess/ Secondary & Higher Education Cess is payable at the rate of 2% and 1% on the Service Tax amount.

Here, “gross value of taxable service” means, the gross amount received by the service provider for the taxable service rendered by him.

What is meant by Service Tax Registration? Who should apply for registration?

Every service provider providing taxable service of value exceeding Rs. 9 lakhs, in the preceding financial year, is required to register with the Service Tax office or the Central Excise office. They would have to take only one registration even if they operate from more than one premise but have centralised billing at one place. However, if such service provider does not have Centralised billing at one place, then it will have to register at each place separately. Besides, only one registration is required to be taken even if it provides more than one service but from the same premises.

Why Registration is compulsory?

Registration is identification of an assessee. Identification is necessary to deposit service tax, file returns and undertake various processes obtained by law relating to service tax. Failure to obtain registration would attract penalty.

When Service tax registration should be done?

When any service provider commences business of providing taxable service, such service provider is required to register itself within 30 days of such commencement of business.

In case, service tax is extended to a new service an existing service tax provider must register itself within a period of 30 days from the date of new levy.

What is the procedure for registration?

To get registration an application in Form ST-1(in duplicate) has to be filed before the jurisdictional Central Excise officer/Service Tax officer. Department is required to issue the registration certificate within 7 days of the receipt of the application. In case of failure to issue registration certificate within 7 days, the registration applied for is deemed to have been granted and the company can carry out its activities.

Is it pre – requisite to obtain a PAN No. from Income Tax Department for obtaining Service Tax Registration?

Having a PAN is essential for successful registration and for payment of service tax using the G.A.R 7 form. The main objective of allocating Service Tax Code (STC) Number based on PAN allotted by Income tax department is to identify the concerned person where he is located and registered.

When is Service Tax required to be paid?

Other than companies, service providers need to pay by 5th day of month ending after quarter, thus for April-June quarter, Service Tax has to be paid by 5th of July. Here one thing has to be noted that for the quarter ending March, service tax has to be deposited by 31st of March of that quarter itself.

How to pay Service Tax?

Form G.A.R.7 (previously known as TR6 Challan) should be used to make service tax payments. Payment of service tax may be made at the specified branches of the designated banks. The details of such Banks and branches may be obtained from the nearest Central Excise Office/Service Tax Office.

Service Tax can also be paid electronically, using e-payment facility.

What is the interest rate applicable on delayed payment of Service Tax?

Every person who is liable to pay the tax fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at the rate of fifteen percent per annum from the date of non – payment till the date of payment.

What is the due date of filling Service Tax return?

Due date of filling return is on half yearly basis for all assessees:

• for April to Sept – 25th Oct
• for Oct to Mar – 25th April

What is the due date of filling Revised Service Tax return?

Revised return can be filled within 90 days of filing of original return. It is immaterial whether return is filed before or after the due date.

Is online filing of return mandatory?

Electronic filing of service tax return has been made mandatory for all assessee with effect from 1st of October, 2011.

What is the penalty for non-filing or delayed filing of half yearly returns?

If a person fails to furnish in due time the return which he is required to furnish then he shall be liable to penalty which may extend to an amount not exceeding one thousand rupees.

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