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.
• Today there are 109 services under section 65(105),
which are considered taxable.
2
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.
3
Who is liable to pay Service Tax?
(Sec.68 (1) of the Act) says that-the ‘Person’ who
provides the taxable service is responsible for paying
the Service Tax to the Government.
However this rule is subject to exceptions:
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Reverse Charge
1.INSURER
in case of service
provided by
insurance agent
5.SPECIFIED
CONSIGNOR OR
CONSIGNEE
in case of service
provided by goods
transport agency
4.ASSET
MANAGEMENT
COMPANY
in case service
provided by a
distributor to them
Persons Liable
to Pay Service
Tax in Certain
Cases
2.INDIAN
RESIDENT
in case of import of
service
3.BODY
CORPORATE OR
FIRM
in case of receipt of
sponsorship service
General Exemptions
 Payment received in Foreign Exchange
 Services provided to UN or an International
organization (16/2002-ST dated 2.8.2002)
 Specified services provided by a non-resident in the
course of sailing of a ship (22/2005-ST dated 16.6.2005)
 Services provided to SEZ and units in SEZ (4/2004-ST
dated 31.3.2004)
 All Services rendered to or by Reserve Bank of India
REGISTRATION REQUIREMENTS
Section 69 read with Rule 4
•
•
•
•
•
Every Person who is
liable to pay service tax
Application shall be filed
to Superintendent of
Central Excise
Application is to be in
form No. ST-1
Within 30 days
Registration shall be
issued within 7 days in
form ST-2
REGISTRATION REQUIREMENTS
• As per Section 69, every person liable to pay service
tax has to get themselves registered with service tax
department.
• Any provider of taxable services whose aggregate
value of taxable service in a financial year exceeds
Rs. 9 lacs, has to get themselves registered.
8
Contd…
• 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 .
9
Contd…
• Registration Certificate is granted in Form ST-2 within 7
days from the date of receipt of intimation.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)
• CBEC vide Circular no. 35/3/2003 has made it
compulsory for every assessee to obtain the Service Tax
Code number which is a 15 digit alphanumeric no. based
on the PAN
10
Contd…
Assessee providing more than one taxable service
should mention in single application, all the
taxable services provided by him. Rule 4(4), Service
Tax Rule,1994.
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DocumentS to be Submitted with ST-1
(a) Proof of address of the premises
office sought to be registered
(b) PAN number of the assessee
(c) List of Branches offices or premises of
the assessee
(d) Brief note on accounting system
adopted by the assessee
(e) Branch-wise series of invoices
maintained along with a sample copy
thereof
(f) Previous years audited balance sheet
along with gross trial balance of
different branches
(g) Details of records accounts
maintained at different branches and
Central Office
(h) Bank account numbers of the
Branches and Central Office through
which the receipts are deposited,
transacted.
I am
confused
what documents
to be filed
with ST-1
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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Payment of Service Tax through G.A.R. 7
Individual/Firm
Other than Individual/Firm
Quarterly Payment
Monthly Payment
Quarter Ending
on 31st March
Upto
31st
Other Quarters
Month of March
5th of the Month
March
Upto 31st March
following Quarter
E – Payment of Service Tax
Other Months
5th of the
Next Month
E – Payment of Service Tax
Mandatory E - Payment
Optional E - Payment
Rs. 50 Lakhs or More
(Cash+CENVAT)
Less than Rs. 50 Lakhs
(Cash+CENVAT)
In case of Large
Taxpayer Unit
Check the Limit
Individually
for Every
Registered
Premises
Other than LTU
Check Cumulative
Limit for Every
Registered
Premises
Return of Service Tax

Return of Service Tax to be filed
Half Yearly – ST-3

For 1st April to 30th September


Due Date - 25th October
For 1st October to 31st March

Due Date - 25th April
E-filing of ST-3 return
 Basic Requirement
• PAN Based Service Tax Code (STC)
• File return on www.servicetaxefiling.nic.in
 Condo nation of Delay
 Only for those using e-filing Facility first time
 Assessee has faced technical difficulties
 Delay of 1 month shall be condoned as per Circular No.
71/2004
SSP Exemption Limit
Rs. 1000000/-
1500000
Rs. 900000/-
1000000
Have to pay Service tax on
crossing the aggregate value
of taxable service not
exceeding the threshold limit
of Rs. 10 lacs
1100000
500000
700000
800000
01.04.06
01.04.07
500000
0
X
01.04.08
Have to get himself
registered on crossing the
aggregate value of taxable
service not exceeding the
threshold limit of Rs. 9 lacs.
Turnover
Aggregate value of taxable service means the sum of first consecutive
payments received during a financial year towards taxable service
provided or to be provided.
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
Lacs.
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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Exception
• Taxable services provided by a person under Brand
Name or Trade Name, whether registered or not, of any
other person are not eligible for the threshold limit
exemption of Rs.
10 Lacs. [Notification No. 6/2005]
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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 portion of revenue is exepmted (abated)
while computing the assessable value.
Example: If invoice for servicing is to be raised for Rs.
1000/- and abatement of 75% is available(then service
tax will be imposed only on [1000 – 75% of 1000] Rs.
250/-
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Abatements:




Goods transport agency -75% abated.
Construction of residential services-67% abated.
Banking services- 30%
Rent a cab-60%
And so on…
Service Tax Rate
Period
From 1.7.1994 to 13.05.2003
From 14.5.2003 to 09.09.2004
From 10.9.2004 to 17.04.2006
From 18.4.2006 to 10.05.2007
From 11.05.2007 to 24.02.2009
From 25.02.2009
Rate
5%
8%
10%
12.24%*
12.36%*
10.3%*
*Inclusive of cess
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Failure to Pay Service Tax
• Interest(sec. 75) :- Interest @13% p.a. is payable on
the short-fall or unpaid tax for delayed period.
• Penalty(sec. 76) :•
Rs.200 for every day during which failure
continues, or
•
2% of tax per month, whichever is higher.
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Delay in Filing Return
Period
Up to 15 days
16 to 30 days
Beyond 30 days
Fine/Penalty
Rs.500/Rs.1000/Rs.1000/- plus Rs.100/- per day
from the 30th day till date of
furnishing return (max Rs
20,000)
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SERVICE TAX
CENVAT CREDIT
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What is CENVAT Credit Scheme ?
The CENVAT Credit Rules, 2004, introduced with effect from
10.9.2004, provides for availment of the credit of the Service
Tax paid on the input services / Central Excise Duties paid on
inputs / capital goods / Additional Customs Duty leviable
under the Customs Tariff Act, equivalent to the duties of
excise.
Such credit amount can be utilized towards payment of
Service Tax by an assessee on their Output Services. (Refer to
Rule 3 of CENVAT Credit Rules, 2004).
27
Contd…
 Duties paid on the inputs, capital goods and the Service Tax
paid on the 'input' services can be taken as credit.
Education Cess paid on the Excise duty and Service Tax can
also be taken as credit only for payment of Education Cess
relating to output service.
 The interest and penalty amounts cannot be taken as credit.
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New services taxable (introduced in
Finance Act, 2010)
1. Games of chance (zzzzn)
2 Health services (zzzzo)
3 Maintenance of medical records (zzzzp)
4 Promotion of a ‘brand’ of goods, services, events, business entity etc.
(zzzzq)
5 Commercial use or exploitation of any event organized by a person or
organization (zzzzr)
6 Electricity Exchange Service (zzzzs)
7 Copyrights on Cinematographic films and sound recording (zzzzt)
8 Providing of preferential location or external / internal development of
complexes (zzzzu)