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Service tax
In India share of GDP in 2006-07 was - Agriculture - 18.5%, Industry - 26.4%, Services - 55.1% (Source - Economic Survey 2006-07).
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Service tax was imposed on three services w.e.f. 1-7-1994 and its scope is being widened every year. Highlights of the service tax are as follows –
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Service tax is imposed under Finance Act, 1994 as amended from time to time. There is no Service Tax Act.
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Service tax is payable @ 12% plus education cess of 2%, plus SAH education cess of 1% (total 12.36%) w.e.f. 11th May 2007 [Section 66]. Service tax was 12.24% from 18-4-2006 to 10-5-2007. Earlier, the rate was 10.2% from 10-9-2004 to 17-4-2006.
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Service tax is payable on taxable services as defined in various clauses of section 65(105) of Finance Act, 1994. Presently, about 99 services are taxable.
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Service tax is payable on gross amount charged for taxable service provided or to be provided [Section 67]. If consideration is partly not in money, valuation is required to be done as per Valuation Rules. Tax is payable when advance is received.
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Small service providers upto eight lakhs are exempt. Export of service is exempt from service tax under Notification No. 6/2005-ST dated 1-3-2005. Services provided in J&K are not taxable [section 64(1)]
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Cenvat credit is available of inputs, input services and capital goods used for providing taxable output services.
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In some cases, receiver of service is liable to pay service tax. This is termed as ‘reverse charge’ [Section 68(2)].
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Every provider of taxable service should apply for registration in form ST-1 within 30 days from date of levy (in case of new services) and date of commencement of business of providing taxable service In case of existing services [Rule 4(1)]. Registration will be deemed to have been granted if not received within seven days [Rule 4(5)].
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Assessee providing service from various premises can have centralised registration [Rule 4(2)]
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Service provider is required to prepare invoice within 14 days, even in respect of advance received [Rule 4A].
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Tax should be paid by 5th of following month (6th in case of e-payment). If assessee is individual or proprietary or partnership firm, tax is payable on quarterly basis. This facility is not available to HUF. In March, tax is payable by 31st March [Rule 6].
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If payment of tax is delayed, interest is payable @ 13% [Section 75]
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Assessee has to submit half yearly return in form ST-3 in triplicate within 25 days of close of half year [Rule 7]
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Penalty is payable for non-registration, late payment of tax, non-submission of returns etc. Mandatory penalty is payable for suppression of facts, willful misstatement, fraud or collusion [sections 76 to 80]
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The tax is administered by excise department. Adjudication order is issued by excise officer.
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