“Money has no smell,” A Roman

emperor observed when he clapped a tax on public toilets.

I

tax what y

ou

cannot see!

Which were the three services that were

taxed when the Service tax was

introduced in 1994??

Introduction:• Service Tax was introduced in 1994 vide Finance Service Tax was introduced in 1994 vide Finance

Act, 1994 with 3 SERVICES namely, Brokerage Act, 1994 with 3 SERVICES namely, Brokerage charged by stockbroker, Telephone services & charged by stockbroker, Telephone services & premium on General Insurance Services.premium on General Insurance Services.

• Applicable to whole of India except Jammu & Applicable to whole of India except Jammu & Kashmir. Kashmir.

• Today there are 109 services under section 65(105),Today there are 109 services under section 65(105), which are considered taxable.which are considered taxable.

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What is Service Tax?

• It is a tax levied on the transaction of It is a tax levied on the transaction of certain certain Specified Services, by the Central , by the Central Government under the Finance Act, 1994.Government under the Finance Act, 1994.

• It is an It is an Indirect Tax, which means that , which means that normally the service provider pays the tax normally the service provider pays the tax and recovers the amount from the and recovers the amount from the recipient of taxable service.recipient of taxable service.

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Who is liable to pay Service Tax?

(Sec.68 (1) of the Act) says that-the ‘Person’ (Sec.68 (1) of the Act) says that-the ‘Person’ who provides the taxable service is responsible who provides the taxable service is responsible for paying the Service Tax to the Government.for paying the Service Tax to the Government.

However this rule is subject to exceptions:However this rule is subject to exceptions:

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Reverse ChargeReverse Charge

5.SPECIFIED CONSIGNOR OR

CONSIGNEEin case of service provided by goods transport agency

4.ASSET MANAGEMENT

COMPANYin case service provided by a

distributor to them

3.BODY CORPORATE OR

FIRMin case of receipt of sponsorship service

2.INDIAN RESIDENT

in case of import of service

1.INSURERin case of service

provided by insurance agent

Persons Liable to Pay Service Tax in Certain

Cases

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 As per Section 69, every person liable to pay service tax has to get themselves pay service tax has to get themselves registered with service tax department.registered with service tax department.

• Any provider of taxable services whose Any provider of taxable services whose aggregate value of taxable service in a aggregate value of taxable service in a financial year exceeds financial year exceeds Rs. 9 lacs, has to has to get themselves registered.get themselves registered.

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• Application for registration in Application for registration in Form ST-1 to to be made to concerned Superintendent of be made to concerned Superintendent of Central Excise.Central Excise.

• The application for registration shall be The application for registration shall be made within made within 30 days, from the date on from the date on which the levy of service tax is brought into which the levy of service tax is brought into force in respect of the relevant services or force in respect of the relevant services or of the commencement of business where of the commencement of business where services has services has already been levied .already been levied .

Contd…

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Contd…• Registration Certificate is granted Registration Certificate is granted in in Form ST-2

within within 7 days from the date of receipt of from the date of receipt of intimation.intimation.In case the registration certificate is In case the registration certificate is not issued within seven days, the registration not issued within seven days, the registration applied for is deemed to have been granted. applied for is deemed to have been granted. (Rule 4(5) of the STR, 1994)(Rule 4(5) of the STR, 1994)

• CBEC vide Circular no. 35/3/2003 has made it CBEC vide Circular no. 35/3/2003 has made it compulsory for every assessee to obtain the compulsory for every assessee to obtain the Service Tax Code number which is a 15 digit Service Tax Code number which is a 15 digit alphanumeric no. based on the PANalphanumeric no. based on the PAN

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Assessee providing more than one taxable Assessee providing more than one taxable service should mention in single service should mention in single application, all the taxable services application, all the taxable services provided by him. Rule 4(4), Service Tax provided by him. Rule 4(4), Service Tax Rule,1994.Rule,1994.

Contd…

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DocumentS to be Submitted with ST-1DocumentS 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 Service providers having centralised accounting or centralised billing system, accounting or centralised billing system, at their option, can have Centralised at their option, can have Centralised registration at one or more places. registration at one or more places. Commissioner of Central Excise / Service Commissioner of Central Excise / Service Tax in whose jurisdiction centralised Tax in whose jurisdiction centralised account or billing office of the assesses account or billing office of the assesses exists, is empowered to grant centralised exists, is empowered to grant centralised registration.registration.

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Payment of Service Tax through G.A.R. 7

Quarterly Payment

Other than Individual/FirmIndividual/Firm

Monthly Payment

Quarter Endingon 31st March

Other Quarters Month of March Other Months

Upto 31st March5th of the Month

following QuarterUpto 31st March

5th of the Next Month

E – Payment of Service Tax

E – Payment of Service Tax

Rs. 50 Lakhs or More (Cash+CENVAT)

Optional E - PaymentMandatory E - Payment

Less than Rs. 50 Lakhs(Cash+CENVAT)

In case of Large Taxpayer Unit

Other than LTU

Check the LimitIndividuallyfor Every RegisteredPremises

Check Cumulative Limit for Every

RegisteredPremises

Return of Service TaxReturn of Service Tax

Return of Service Tax to be filed Return of Service Tax to be filed Half Yearly – ST-3Half 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 LimitSSP Exemption Limit

500000700000 800000

1100000

0

500000

1000000

1500000

X 01.04.06 01.04.07 01.04.08

Turnover

Have to pay Service tax on crossing the aggregate value of taxable service not exceeding the threshold limit of Rs. 10 lacs

Have to get himself registered on crossing the aggregate value of taxable service not exceeding the threshold limit of Rs. 9 lacs.

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.

Rs. 1000000/-

Rs. 900000/-

Exemption Scheme for Small Service Providers

Central Government, provides the basic Central Government, provides the basic exemption to the service providers whose exemption to the service providers whose aggregate value of taxable services provided aggregate value of taxable services provided in last financial year is less than in last financial year is less than Rs. 10 Lacs.

Assessee should not charge the Service Tax if Assessee should not charge the Service Tax if he/she is claiming the benefit of exemption. If he/she is claiming the benefit of exemption. If charged by mistake the same should be charged by mistake the same should be refunded to the service receiver.refunded to the service receiver.

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• Taxable services provided by a person under Taxable services provided by a person under Brand Name or Trade Name, whether , whether registered or not, of any other person are not registered or not, of any other person are not eligible for the threshold limit exemption of eligible for the threshold limit exemption of

Rs.Rs. 10 10 Lacs. [Notification No. 6/2005]Lacs. [Notification No. 6/2005]

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Exception

AbatementIn case of certain services, the benefit of In case of certain services, the benefit of abatement (rebate) is allowed to the service abatement (rebate) is allowed to the service provides. In such cases, the portion of provides. In such cases, the portion of revenue is exepmted (abated) while revenue is exepmted (abated) while computing the assessable value.computing the assessable value.Example: If invoice for servicing is to be If invoice for servicing is to be raised for Rs. 1000/- and abatement of 75% is raised for Rs. 1000/- and abatement of 75% is available(then service tax available(then service tax will be will be imposed only on [1000 – 75% of 1000] Rs. imposed only on [1000 – 75% of 1000] Rs. 250/-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 RatePeriod Rate

From 1.7.1994 to 13.05.2003 5%

From 14.5.2003 to 09.09.2004

8%

From 10.9.2004 to 17.04.2006

10%

From 18.4.2006 to 10.05.2007

12.24%*

From 11.05.2007 to 24.02.2009

12.36%*

From 25.02.2009 10.3%*25

*Inclusive of cess

Failure to Pay Service Tax• Interest(sec. 75) :- :- Interest @13% p.a. is Interest @13% p.a. is

payable on the short-fall or unpaid tax for payable on the short-fall or unpaid tax for delayed period.delayed period.

• Penalty(sec. 76) :- :- • Rs.200 for every day during which Rs.200 for every day during which

failure continues, orfailure continues, or• 2% of tax per month, whichever is 2% of tax per month, whichever is

higherhigher..

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Delay in Filing ReturnPeriod Fine/Penalty

Up to 15 days Rs.500/-

16 to 30 days Rs.1000/-

Beyond 30 days

Rs.1000/- plus Rs.100/- per day from the 30th day till date of furnishing return (max Rs 2,000)

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SERVICE TAXSERVICE TAXCENVAT CREDITCENVAT CREDIT

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).

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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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Contd…

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)

Whats happening: Total revenue earned through service tax

was Rs.38169 Crores which will go up to Rs. 1,36,392 Crores.

Recently a team of Bollywood producers visited Finance Minister to get exemption for service tax. But the request was denied.

High Service Tax Paying EventIndian Premier League pays a large chunk of

service tax every year. The revenue was 64 crores in 2009 and 29 crores in 2010.

Thank YouThank You

ArchanaArchana

SowmyaSowmya