• How-to

Service tax is levied at a uniform rate of 12.24 percent (including education cess of 2 percent) from the date of enactment of Finance Bill, 2006. Generally, the liability to deposit service tax is on the service provider.

However, in case service is provided by a person (having a business / fixed establishment from where service is provided / permanent address/place of residence) based outside India, and such service provider does not have an office in India, then the person liable to deposit service tax is the service recipient based in India.

Further, with respect to ‘goods transport agency services’, if the consignee or consignor is a company, corporation, body corporate, factory, etc., the service tax is required to be paid by the person liable to pay freight instead of the goods transport agency.

The different jurisdictional Commissionerates of Central Excise and Director General of Service tax are authorized to administer service tax in India.
As per the Export of Services Rules, 2005, (effective from March 15, 2005), export of services is not liable to service tax.

Further, rebate of service tax paid on exported services has been granted subject to certain conditions. Rebate of excise duty on inputs and service tax paid on input services used in providing the exported service has been granted subject to certain conditions.

Registration
A prospective service tax assessee seeking registration should file an application in Form ST-1 (in duplicate) with the jurisdictional Central Excise officer/Service Tax officer within 30 days from the date on which the service becomes taxable or from the commencement of the provision of a taxable service, as may be applicable.

The application is required to be filed, generally, along with the following documents:
* A copy of the PAN of the service provider
* The memorandum and articles of association of the establishment providing the services
* An address proof of the establishment from which it functions
* A power of attorney of the authorized signatory for the purposes of the said registration.

The requirement for filing the above stated documents (other than Form ST-1) is not prescribed in statute and may vary from one jurisdiction to another.
The department is required to issue the registration certificate to the assessee within seven days of the receipt of the application.

In case of failure to issue registration certificate within seven days, the registration applied for is deemed to have been granted and the assessee can carry on its activities. The registration certificate contains a service tax registration number.

A single registration certificate number can be obtained for all services. However, the applicant should mention all taxable service categories on the registration application.

Service tax registration needs to be obtained for each taxable service category. In case a service provider already has a service tax registration certificate, the service provider would need to get the service tax registration certificate amended for the addition of the new taxable service category in the certificate.
An application in the prescribed format (in duplicate), as provided in Annexure II of CBEC Service tax Circular No. 35/3/2001 dated August 27, 2001, along with a certified copy of the PAN card, has to be submitted to the Superintendent of Central Excise.

The service tax is required to be paid only on the value of taxable services received for a particular month or quarter, as the case may be, and not on the gross amount charged or billed to the client. Ordinarily service tax should be deposited on a monthly basis. However, individual proprietary firms or partnership firms are required to deposit tax quarterly. In both the cases, whether monthly or quarterly, the tax is to be deposited by the 5th of the month following the said month or the said quarter. However, tax for the month of March is required to be deposited by March 31. Service tax is required to be deposited through TR 6 challans.

Please note that in all cases where the amount received is less than the gross amount charged/billed to the client, the service tax assessees are required to amend the bills, either by rectifying the existing bill or issuing a revised bill and by properly endorsing such change in the billed amount.

In case payments have been made in advance for services that have not been provided as yet, service tax is required to be deposited on such advance amounts also.

The service tax assesses are required to file a half yearly return in Form ST-3 or ST-3A, in triplicate, to the Superintendent Central Excise dealing with service tax. The returns have to be filed within 25 days from the last day of the particular half-year. Thus, the returns for half year ending September 30 and March 31 have to be filed by October 25 and April 25, respectively. The returns should be accompanied by copies of all TR 6 challans, evidencing payment of service tax.

Further, an assessee filing service tax returns for the first time should also furnish to the Department the list of all the accounts maintained by them relating to service tax.

However, as per the amendment introduced by the Finance Act, 2006, the assessee is required to pay penalty not less than Rs.200 per day of delay or 2 percent of the tax per month of delay, whichever is higher up to a maximum penalty that is equivalent to the service tax that has not been deposited. The actual levy of penalty is at the discretion of
the authorities.

Basic cuts
Exemptions from service tax available across all taxable service categories are:
* All taxable services provided by any person to the United Nations or any international agency, as defined, shall be exempt from paying service tax related to those services.
* All taxable services provided to a developer or units of SEZ for the development, operation and maintenance of a SEZ or for setting up an SEZ unit or for manufacture of goods by the SEZ unit have been exempted from service tax, subject to satisfaction of the prescribed procedural requirements.
* The value of goods and materials that are sold by the service provider to the recipient of the service, provided there is documentary proof specifically indicating the value of the goods and materials.
* All taxable services rendered by the RBI have been exempted from service tax w.e.f. March 1, 2006.

©Entrepreneur March 2010

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