Service Tax

Hello. In this post, we will be talking about Service Tax. We have covered the following topics:

Introduction to Service Tax

Service Tax 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, in which normally the service provider pays the tax and recovers the amount from the recipient of service.

Service Tax was first levied on General Insurance Services, Stock Broking and telephone and Pager services. The Central Excise Department administers the Service Tax Law. Totally, 139 types of services are covered under the service tax.

Service Tax Rates

The rate of Service Tax is 14% (including education cess), payable on the “gross value of taxable service”. In addition to this, Swach Bharat Cess at the rate of 0.5% and Krishi Kalyan Cess at the rate of 0.5 and is payable on the Service Tax amount. (Total ST being 15%) The tax rates may change during Annual Budget by a Finance Act. This rate is effective from 01.04.2016.

Threshold Limit: Threshold limit is the limit up to which no service tax is payable even for the services that are taxable in the normal case. This is referred to as General Exemption.

Service tax is payable on amount received against service rendered. Hence, when service provider’s receipts exceed Rs. 10 lakhs for the financial year then he has to pay service tax.

Every person liable for paying the service tax shall make an application, in Form ST1 for registration within a period of 30 days from the date on which the service tax is levied.

Every assessee shall submit the half yearly return in Form ST-3. Every assessee shall submit the half yearly return by the 25th of the month following the particular half-year.

A large taxpayer, on demand, may be required to make available the financial, stores and Cenvat credit records in electronic media, such as, CD for the purpose of carrying out any scrutiny and verification, as may be necessary.

 

Sl. No. Period Rate of Tax Rate of Education Cess
1. 1994 to 13.05.2003 5% Nil
2. 14.05.2003 to 09.09.2004 8% Nil
>3. 10.09.2004 to 17.04.2006 10% 2% of the S.T.
4. 18.04.2006 to 10.05.2007 12% 2% of the S.T.
5. 11.05.2007 to 24.02.2009 12% 2% of S.T. + 1% of the S.T. (Secondary and Higher Education Cess)
6. 24.02.2009 to 31.03.2012 10% 2% of S.T. + 1% of the S.T. (Secondary and Higher Education Cess)
7. 01.04.2012 to 31.03.2015 12% 2% of S.T. + 1% (Secondary & Higher Education Cess) of the S.T.
8. 01.04.2015 to 14.11.2015 14% Nil
9. 15.11.2015 to 31.5.2016 14.5% Nil
10. 01.06.2016 to 30.06.2017 15% Nil

Service Tax payment

How is payment of Service Tax done?

Service Tax can be paid through G.A.R.7 (previously known as TR6 Challan) in 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, called e-payment facility. e-Payment is a payment mode through which a Taxpayer can remit his tax dues to CBEC using Internet Banking Service. It is an additional facility being offered by the banks besides conventional procedure.

When is Service Tax to be paid?

For individual or a proprietary or partnership firm – Quarterly -by the 5th day of the month following each quarter and by the 6th day of the month following each quarter if the duty is deposited electronically through internet banking. For example, Service Tax for the quarter ending 30th of June is to be paid by 5th or 6th of July as the case may be.

Illustration: A practicing Chartered Accountant renders taxable services for which he receives payments for the months of Apr, May and Jun, which constitutes a quarter, the service tax so received by him during, that quarter should be paid before 5th of Jul.

For all other categories (Company, Society, Trust etc.) – Monthly – by the 5th day of the succeeding month and by the 6th day of the succeeding month if the duty is deposited electronically through internet banking.
Exception: For the month of March or quarter ending March, all assessees have to pay by 31st of March of the Calendar year (Rule 6(1) of the STR, 1994).

Procedure for e-filing of service tax:

The various forms in Service Tax are:

  • ST1: For Registration
  • ST3: For Return Filing
  • GAR 7: Challan for payment

Procedure for return filing

  1. File of an application to the jurisdictional Asst./Deputy Commissioner of Service Tax, 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 clicking on the following link: ACES – ST filing.
  3. Upon entering the 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.

Due dates to file return:

ST-3 Return is required to be filed twice in a financial year – half yearly.

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

If a person fails to furnish the ST-3 Return within the due date [25th October and 25th April every year] he shall be liable to penalty which may extend to an amount not exceeding one thousand rupees (Section 77 of the Act).

Mandatory Penalty for Late filing of ST-3 Return under Rule 7C of Service Tax Rules, 1994.

Sl. No. Period of Delay from the prescribed date Penalty
1 15 days Rs.500/-
2 Beyond 15 days but not later than 30 days Rs.1000/-
3 Beyond 30 days Rs.1000/- plus Rs. 100/- for every day from the thirty first day till the date of furnishing the said return

Statutes governing the taxation relating to Service Tax

The Statutes governing the levy of Service Tax are as follows:

  1. The Finance Act, 1994 – Chapter V – Section 64 to 96 I. (referred to as ‘Act’ in this book) This chapter extends to the whole of India except the State of Jammu and Kashmir.
  2. The Finance Act, 2004 Chapter VI – for levy of Education Cess @ 2% on the Service Tax.
  3. The Service Tax Rules, 1994. (Referred to as ‘Rules’ or STR, 1994 in this book)
  4. The CENVAT Credit Rules, 2004.
  5. The Export of Service Rules, 2005
  6. The Service Tax (Registration of Special categories of persons) Rules, 2005.
  7. The Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 (with effect from 19th April, 2006) – Notification No. 11/2006-ST dated 19.4.2006.
  8. The Service Tax (Determination of Value) Rules, 2006 (with effect from 19th April 2006) – Notification No. 12/2006-ST dated 19.4.2006.
  9. Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007- Notification No. 32/2007-Service Tax dated 22nd May, 2007.
  10. In addition to the above, certain provisions of the Central Excise Act, 1944 are also made applicable for Service Tax matters (Section 83 of the Finance Act, 1994).

Exemptions/ Abatements under Service Tax

Some general exemptions are provided in respect of:

  • Services provided to the United Nations
  • Services to units in and developers of Special Economic Zones
  • Services rendered free of cost and
  • Services prior to the effective date of the service being included as a taxable service, even if payments are realized later

Exemptions available for small service providers

Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding eight lakhs rupees in any financial year.

The above-mentioned exemption based on the turnover is not available to the persons who are liable to pay Service Tax but are not the service providers. For example:

  1. The recipient of services from an overseas service provider who has no registered office in India
  2. A company incurring the Transportation charges for availing the services from Goods Transport Agencies, for transportation of goods by Road.
  3. Whether the service charges were received for the services provided or to be provided.

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.

Abatements

Abatement refers to the portion of value of taxable service, which is exempt in terms of a notification.

List of Services under Service Tax

Click here to see the notification and the list of services found on the official website.

Sl.N Service Category Date Of introduction Accounting Codes

Tax collection

Other Receipts

Deduct Refunds

Education Cess

1 Advertising 01.11.1996 00440013 00440016 00440017 00440298
2 Air Travel Agent 01.07.1997 00440032 00440033 00440034 00440298
3 Airport Services 10.09.2004 00440258 00440259 ‘00440260 00440298
4 Architect 16.10.1998 00440072 00440073 00440074 00440298
5 Asset management (by
other than Banking
company)
01.06.2007 00440418 00440419 00440420 00440421
6 ATM Operations,
Management or
Maintenance
01.05.2006 00440346 00440347 00440348 00440298
7 Auctioneers’ service, other than auction of property under directions or orders of
a count of or auction by
Central Govt.
01.05.2006 00440370 00440371 00440372 00440298
8 Authorised Service Station 16.07.2001 00440181 00440182 00440183 00440298
9 Auxiliary to General
Insurance / Life Insurance
16.07.2001 /
16.08.2002
00440169 00440170 00440171 00440298
10 Banking & Other Financial Services 16.07.2001 00440173 00440174 00440175 00440298
11 Beauty Parlour 16.08.2002 00440209 00440210 00440211 00440298
12 Broadcasting 16.07.2001 00440165 00440166 00440167 00440298
13 Business Auxiliary Services 01.07.2003 00440225 00440226 00440227 00440298
14 Business Exhibition Service 10.09.2004 00440254 00440255 00440256 00440298
15 Business Support Service 01.05.2006 00440366 00440367 00440368 00440298
16 Cable Operator 16.08.2002 00440217 00440218 00440219 00440298
17 Cargo Handling 16.08.2002 00440189 00440190 00440191 00440298
18 Chartered Accountant 16.10.1998 00440092 00440093 00440094 00440298
19 Cleaning Service 16.06.2005 00440318 00440319 00440320 00440298
20 Clearing & Forwarding
Agent
16.07.2001 00440045 00440046 00440047 00440298
21 Clubs and Associations 16.06.2005 00440322 00440323 00440324 00440298
22 Commercial or Industrial Construction 10.09.2004 00440290 00440291 00440292 00440298
23 Commercial Training or Coaching 01.07.2003 00440229 00440230 00440231 00440298
24 Company Secretary 16.10.1998 00440100 00440101 00440102 00440298
25 Construction of Complex 16.06.2005 00440334 00440335 00440336 00440298
26 Consulting Engineer 07.07.1997 00440057 00440058 00440059 00440298
27 Convention Centre 16.07.2001 00440133 00440134 00440135 00440298
28 Cost Accountant 16.10.1998 00440096 00440097 00440098 00440298
29 Courier 01.11.1996 00440014 00440018 00440019 00440298
30 Credit Card, Debit Card, Charge Card or other payment card related services 01.05.2006 00440394 00440395 00440396 00440298
31 Credit Rating Agency 16.10.1998 00440088 00440089 00440090 00440298
32 Custom House Agent 15.06.1997 00440026 00440027 00440028 00440298
33 Design Services 01.06.2007 00440422 00440423 00440424 00440298
34 Development & Supply of Content 01.06.2007 00440414 00440415 00440416 00440298
35 Dredging 16.06.2005 00440310 00440311 00440312 00440298
36 Dry Cleaning 16.08.2002 00440221 00440222 00440223 00440298
37 Erection, Commissioning or
Installation
01.07.2003 00440233 00440234 00440235 00440298
38 Event Management 16.08.2002 00440197 00440198 00440199 00440298
39 Fashion Designer 16.08.2002 00440213 00440214 00440215 00440298
40 Forward Contract Services 10.09.2004 00440282 00440283 00440284 00440298
41 Franchise Service 01.07.2003 00440237 00440238 00440239 00440298
42 General Insurance 01.07.1994 00440005 00440006 00440120 00440298
43 Health Club & Fitness
Centre
16.08.2002 00440205 00440206 00440207 00440298
44 Intellectual Property Service 10.09.2004 00440278 00440279 00440280 00440298
45 Interior Decorator 16.10.1998 00440076 00440077 00440078 00440298
46 Internet Café 01.07.2003 00440241 00440242 00440243 00440298
47 Internet Telephony Service 01.05.2006 00440382 00440383 00440384 00440298
48 Life Insurance 10.09.2004 00440185 00440186 00440187 00440298
49 Mailing List Compilation and
Mailing
16.06.2005 00440330 00440331 00440332 00440298
50 Management Consultant 01.07.1997 00440116 00440117 00440118 00440298
51 Management, Maintenance
or Repair Service
01.07.2003 00440245 00440246 00440247 00440298
52 Mandap Keeper 16.10.1998 00440035 00440036 00440037 00440298
53 Manpower Recruitment or Supply Agency 07.07.1997 00440060 00440061 00440062 00440298
54 Market Research Agency 16.10.1998 00440112 00440113 00440114 00440298
55 Mining of Mineral, Oil or Gas 01.06.2007 00440402 00440403 00440404 00440298
56 On-line Information &
Database Access or
Retrieval Service
16.07.2001 00440153 00440154 00440155 00440298
57 Opinion Poll Service 10.19.2004 00440274 00440275 00440276 00440298
58 Outdoor Caterer 10.09.2004 00440051 00440052 00440053 00440298
59 Packaging Service 16.06.2005 00440326 00440327 00440328 00440298
60 Pandal or Shamiyana Services 10.09.2004 00440054 00440055 00440056 00440298
61 Photography 16.07.2001 00440129 00440130 00440131 00440298
62 Port Service 16.07.2001 00440177 00440178 00440179 00440298
63 Public Relations service 01.05.2006 00440374 00440375 00440376 00440298
64 Rail Travel Agent 16.08.2002 00440201 00440202 00440203 00440298
65 Real Estate Agent /
Consultant
16.10.1998 00440104 00440105 00440106 00440298
66 Recovery Agent 01.05.2006 00440350 00440351 00440352 00440298
67 Registrar to an Issue 01.05.2006 00440338 00440339 00440340 00440298
68 Rent – a – Cab Operator 16.07.1997 00440048 00440049 00440050 00440298
69 Renting of Immovable
Property
01.06.2007 00440406 00440407 00440408 00440298
70 Sale of space or time for Advertisement, other than print media 01.05.2006 00440354 00440355 00440356 00440298
71 Scientific or Technical
Consultancy
16.07.2001 00440125 00440126 00440127 00440298
72 Security Agency 16.10.1998 00440108 00440109 00440110 00440298
73 Share Transfer Agent 01.05.2006 00440342 00440343 00440344 00440298
74 Ship Management service 01.05.2006 00440378 00440379 00440380 00440298
75 Site Preparation 16.06.2005 00440306 00440307 00440308 00440298
76 Sound Recording 16.07.2001 00440161 00440162 00440163 00440298
77 Sponsorship service
provided to any body
corporate or firm, other than sponsorship of sports event
01.05.2006 00440358 00440359 00440360 00440298
78 Steamer Agent 15.06.1997 00440029 00440030 00440031 00440298
79 Stock Broker 01.07.1994 00440008 00440009 00440121 00440298
80 Storage & Warehousing 16.08.2002 00440193 00440194 00440195 00440298
81 Survey & Exploration of Minerals 10.09.2004 00440270 00440271 00440272 00440298
82 Survey and Map Making 16.06.2005 00440314 00440315 00440316 00440298
83 T.V. & radio Program
Production Services
10.09.2004 00440286 00440287 00440288 00440298
84 Technical Testing &
Analysis Agency / Technical Inspection & Certification Agency
01.07.2003 00440249 00440250 00440251 00440298
85 Telecommunication Service 1.6.20007 00440398 00440399 00440400 00440298
86 Tour Operator 01.09.1997 00440063 00440064 00440065 00440298
87 Transport of goods by Air 10.09.2004 00440266 00440267 00440268 00440298
88 Transport of goods by Road 01.01.2005 00440262 00440263 00440264 00440298
89 Transport of goods in
Containers by rail by any person other than
Government railway
01.05.2006 00440390 00440391 00440392 00440298
90 Transport of goods other than water, through Pipeline or other conduit 16.06.2005 00440302 00440303 00440304 00440298
91 Transport of passengers
Embarking on international journey by air, other than economy class passengers
01.05.2006 00440362 00440363 00440364 00440298
92 Transport of persons by cruise ship 01.05.2006 00440386 00440387 00440388 00440298
93 Travel Agent other than Air & Rail Travel 10.09.2004 00440294 00440295 00440296 00440298
94 Underwriter 16.10.1998 00440084 00440085 00440086 00440298
95 Video Tape Production 16.07.2001 00440157 00440158 00440159 00440298
96 Works Contract 01.06.2007 00440410 00440411 0440412 00440298
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