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Service Tax came in to effect under the jurisdiction of Finance act, 1994 and levied on certain services that are taxable under the section 65. The range of services in service tax has been increased in budget 2012.It is integrated in services which are provided by AC restaurants, and long term and short term lodging facilities provided by hotels and guest houses.Service tax and Income Tax is charged by companies and individual providers as per the new regulation.It can be paid in cash by individual service providers while the companies need to pay on accrual basis only when the value of the services provided by them exceeds Rs 10,00,000 in a financial year, but these new additions are not applicable in the state of Jammu & Kashmir. All the services come under the ambit of service tax,except the one which are mentioned in “negative list” listed in section 66D of Finance Act,1994.
As per the Finance Act, the government of India created a set of rules in order to evaluate and collect service tax in India. Here are the rules listed below, which are applicable to service tax in India:
Rule 1: Short Title and Commencement:
The rules created to evaluate service tax are called as Service Tax Rules,which came into effect from 1st July.
Rule 2: Definitions:
This category of rules is inclusive of the meaning of several 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 defines "quarter", "security services", "renting of immovable property" etc where Quarter is referred 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” is referred to services provided through renting of an immovable property and “security services” refers to services which are related to the security and property.
Rule: 3 Officers Appointment:
As per this rule, the CBEC can appoint the central excise officers.
Rule 4: Registration:
The service provider who comes under the ambit of service tax should register by using the application form ST - 1 within thirty days from the date, on which service tax has been charged.
Rule 4 (A): Information about services which are taxable and to be provided on Bill, Invoice Or Challan
Any service provider who is offering taxable services, will issue an invoice or a challan signed by him or by another person who is authorized containing the basic details like name, address and the registration number of the person providing the service; name and address of the person receiving the service; description and cost of taxable service provided and the amount of service tax to be paid.
Rule 4 (B): Note of Consignment:
Any service provider who provide services, which are related to the transportation of goods should be issued a consignment note.
Rule 5: The Records:
Any records which consists computerized data, maintained and produced by an assessee according to different laws shall be accepted by CBEC.
Rule 5 (A): Access to the Registered Premises:
As per this rule, any officer who is authorized by the commissioner shall have access to any premises for completion of verification required to protect revenues.
Rule (6): Service Tax Payment:
As per this rule, if a person is paying electronically then the service tax shall be credited to the central government by the 6th of every month, and 5th of every month, if paid via other means.
Rule 6(A) Export of Services:
The circumstances under which any service shall be considered as export of service, if the provider is located within the taxable territory and the recipient is located outside India.
Rule 7: Returns:
Every service provider should conform 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:
The services/goods which are provided by transport operators should be furnished for return within a period of six months from the 13th May of 2003, failing which may lead to penalty.
Rule 7 (B) Revision of Return:
As per this rule, an assessee can submit a Form ST-3 to modify or correct any mistakes within ninety 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 central government, if returns are not furnished within 15 days from the date of submission of service tax. If it gets delayed by more than 15 days, the service provider will be required to pay Rs. 1000 and if it extend by more than 30 days,the service provider will be required to pay Rs. 1000 plus Rs.100 per month till the date, returns will not be furnished finally.
Rule 8: Appeal to Commissioner of Central Excise:
The appeal can be made to the Commissioner of Central Excise in Form ST - 4 under section 85 of the Finance Act, 1994.
Rule 9: Form of Appeals to Appellate Tribunal:
The appeal to the Appellate Tribunal can be made 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 have the provisions which can be enjoyed by the large taxpayers. The taxpayer shall submit returns for each registered premises. They may be required to produce all financial records for verification and security as and when required.
In budget 2015, the finance minister announced the increase in service tax from 12.36% to 14% which will include education and secondary education cess in it and it is expected to increase the cost of the restaurant and mobile bills.Another provision which was included in the Finance bill,2014 of imposing Swachh Bharat Cess at 2% on all or selected taxable services of India.
Service tax return can be filed via two methods, online and offline.
Payment procedure of Service Tax:
Either G.A.R-7 challan can be used for the payment of service tax which is available in specified branches of some particular banks or it can be paid online using e-payment facility of CBEC for which it is mandatory to have an internet banking account with authorized banks.
Click on the payment link and then enter your Service Tax Registration number
Select the 'Service Tax' option. Now, a drop-down menu will appear. In this section, you'll be required to fill up details such as your name, name of the premises, address, Commissionerate Name and Code, Division Name and Code & Range Name.
After filing in all the details, Select "Accounting Codes for Service Tax" and choose the code which is applicable to you from the menu. Select the "Education Cess," if applicable.
Select your Bank and then click on "Proceed." This will redirect you to your net banking account where you'll be directed to enter details of the amount that must be paid as service tax. After the amount is paid, a challan is generated which acts as proof of payment. You'll need to show this challan when you file your Service Tax Returns.
A taxpayer is liable to 10% of the service tax as a penalty if he/she has not paid the tax
No penalty is charged if the service tax and interest is paid within 30 days of notice
If the service tax is paid with interest and the penalty should be paid within 30 days of service of the order, then 25% of penalty must be paid as specified in the order.
The penalty can be dismissed on submission of authentic documents which gives a proper reason for the delay/non-payment of the service tax.
Failure for not acquiring service tax registration can attract a penalty of Rs.10,000 or Rs. 200 each day in the default period.
If a person fails to keep the record and documents linked to service tax, a penalty of up to Rs.10,000 is levied.
If a person fails to submit valid documents when summoned by an officer, an Rs.10,000 penalty or Rs. 200 per day during the default period is levied.
For furnishing incorrect or incomplete invoice details, a penalty of up to Rs. 10,000 could be levied by the Excise Department.
Penalty for late service tax return filing is capped at a maximum of Rs.20,000 and this penalty is subject to the number of days delayed.
Penalty up to Rs.1 lakh is imposed on any director, manager, secretary or any other officer of a company if the company has committed any of the below violations:
For violating any provisions of the laws pertaining to service tax under Finance Act (1994), a penalty of Rs.10,000 is levied.
Issuing Bill or Invoice by the service tax assessee is mandatory according to Rule 4A of Service Tax Returns, 1994. The bill /invoice should be issued within 14 days from the payment receipt for the service.
The bill should have the following things on it:
Any firm, company or individual who renders services that aren't included in the list negative things is liable to pay the service tax.
Service tax is a type of indirect tax which is paid by the recipient of various services indirectly to the government through service providers.
Yes, you can easily pay your service tax online by visiting the official website of Central Board of Excise and Custom. You'll need to own a net banking account to do that.
Yes, penalty will imposed on you, if you fail to pay your service tax on time.
This is a challan which can be used to pay service tax manually. This challan is available in specific authorized banks.