Hello. In this post, we will be talking about Service Tax. We have covered the following topics:
- Introduction to Service Tax
- Service Tax Rates
- Service Tax Payment
- Procedure for e-filing Service Tax returns
- Due dates to file return
- Statutes governing the taxation relating to Service Tax
- Exemptions/ Abatements under Service Tax
- List of Services under Service Tax
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
- 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.
- Log on to the Service Tax e-filing home page by clicking on the following link: ACES – ST filing.
- Upon entering the user ID and password, you will be permitted to access the e-filing facility.
- 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|
|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:
- 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.
- The Finance Act, 2004 Chapter VI – for levy of Education Cess @ 2% on the Service Tax.
- The Service Tax Rules, 1994. (Referred to as ‘Rules’ or STR, 1994 in this book)
- The CENVAT Credit Rules, 2004.
- The Export of Service Rules, 2005
- The Service Tax (Registration of Special categories of persons) Rules, 2005.
- 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.
- The Service Tax (Determination of Value) Rules, 2006 (with effect from 19th April 2006) – Notification No. 12/2006-ST dated 19.4.2006.
- Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007- Notification No. 32/2007-Service Tax dated 22nd May, 2007.
- 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:
- The recipient of services from an overseas service provider who has no registered office in India
- A company incurring the Transportation charges for availing the services from Goods Transport Agencies, for transportation of goods by Road.
- 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.
Abatement refers to the portion of value of taxable service, which is exempt in terms of a notification.
List of Services under Service Tax
|Sl.N||Service Category||Date Of introduction||Accounting Codes|
|2||Air Travel Agent||01.07.1997||00440032||00440033||00440034||00440298|
|5||Asset management (by
other than Banking
|7||Auctioneers’ service, other than auction of property under directions or orders of
a count of or auction by
|8||Authorised Service Station||16.07.2001||00440181||00440182||00440183||00440298|
|9||Auxiliary to General
Insurance / Life Insurance
|10||Banking & Other Financial Services||16.07.2001||00440173||00440174||00440175||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|
|20||Clearing & Forwarding
|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|
|25||Construction of Complex||16.06.2005||00440334||00440335||00440336||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|
|34||Development & Supply of Content||01.06.2007||00440414||00440415||00440416||00440298|
|37||Erection, Commissioning or
|40||Forward Contract Services||10.09.2004||00440282||00440283||00440284||00440298|
|43||Health Club & Fitness
|44||Intellectual Property Service||10.09.2004||00440278||00440279||00440280||00440298|
|47||Internet Telephony Service||01.05.2006||00440382||00440383||00440384||00440298|
|49||Mailing List Compilation and
or Repair Service
|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
|57||Opinion Poll Service||10.19.2004||00440274||00440275||00440276||00440298|
|60||Pandal or Shamiyana Services||10.09.2004||00440054||00440055||00440056||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 /
|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
|70||Sale of space or time for Advertisement, other than print media||01.05.2006||00440354||00440355||00440356||00440298|
|71||Scientific or Technical
|73||Share Transfer Agent||01.05.2006||00440342||00440343||00440344||00440298|
|74||Ship Management service||01.05.2006||00440378||00440379||00440380||00440298|
provided to any body
corporate or firm, other than sponsorship of sports event
|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
|84||Technical Testing &
Analysis Agency / Technical Inspection & Certification Agency
|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
|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
|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|
|95||Video Tape Production||16.07.2001||00440157||00440158||00440159||00440298|