| FREQUENTLY
ASKED QUESTIONS IN SERVICE TAX |
|
1. What is the
rate of Service Tax and its applicability? |
|
At present Service Tax
is collected at an uniform rate of 8% (effective
from 14.05.2003) on the value of taxable
services rendered, in respect of all 58
Services notified so far The applicability
of the tax @ 8% is attracted w.e.f. from
14.05.2003 only if the bill for the service
rendered was raised after 14.05.2003 as
per Board’s Circular No:56/5/2003
dated:25.04.2003.Value of taxable service
shall be the gross amount charged by the
service provider. However in case of services
introduced this year, Service Tax @ 8% is
leviable from 01.07.2003. |
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| 2.
How a service provider can get himself registered
with the dept.? |
| Section
69 of the Finance Act, 1994 and Rule 4 of
the Service Tax Rules, 1994 deals with registration
formalities. |
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The Service Tax administration is with Central
Excise Dept. |
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Application shall be made in Form ST1 before
proper Central Excise Officer. |
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Application shall be made within 30 days of
commencement of the business, if the levy
was already in force. In case of new levies
the application shall be made within 30 days
from the imposition of the levy. |
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If a person has more than one place of business
and centralised billing system, he may opt
to register where the billing is done. |
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If an assessee provides more than one service
he can get single registration. |
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The Registration Certificate shall be granted
by the Central Excise Office within 7 days
of making an application. If not granted within
7 days, it shall be deemed to have been granted. |
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No Registration fee is payable. |
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| 3.
How one can pay Service Tax? |
| If
the assessee is an individual/proprietary
concern/partnership firm - the service tax
payable on the value of taxable services received
in any quarter shall be paid to the credit
of the Central Government, by the 25th of
month immediately following the said quarter.
In case of other assessees, the service tax
payable on the value of taxable services received
in any month shall be paid to the credit of
the CG by the 25th of the following month.
Month means a calender month and quarter means
April to June, July to September, October
to December and January to March. The payment
shall be tendered in any one of the branches
of the nominated banks along with a TR 6 challan.
The major head for service tax is 0044. Every
category of service has got a minor/sub head. |
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| 4.
What are the statutory requirements to be
complied with? |
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Every assessee shall file a half yearly return
in form ST3. Even if there is no service provided
a NIL return has to be filed.
- Every assessee shall furnish the documents
called for by the department to complete
the assessment.
- Assessee need not maintain any separate
record for service tax.
- Every assessee shall furnish a list of
all accounts maintained by him to the dept. |
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| 5.
Whether the Returns can be sent by post? |
| Yes,
can be filed by post. For the purpose of convenience
Board has introduced the system of filing
returns through computer. (e-filing) with
effect from April 2003 for 10 categories of
services. |
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|
6. Whether the service tax paid by one service
provider can be used for payment of service
tax by other service provider? |
|
Yes. If a service provider avails the services
of another service provider of same category,
in rendering his business, he can avail credit
of the service tax paid by the input service
provider as per the provisions of Service
Tax Credit Rules, 2002. For details, the text
of the Rules may be referred to. |
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| 7.
Is service tax payable, if the service provider
is a foreigner? |
|
With effect from 16.08.2002, Rule 2(d) (iv)
of Service Tax Rules, 1994 has been inserted
(vide Notification No:12/2002 S.Tax dated:01.08.2002)
to the effect that in case if the service
provider is a non-resident, person outside
India, etc., the service tax shall be paid
by the person who has availed the service.
Prior to this date, if the service receiver
is authorised by the foreign service provider,
for payment of all Indian taxes, the service
receiver shall be liable to pay. |
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|
8. What are the penal provisions provided
for? |
| SECTION
|
NATURE
OF OFFENCE |
PENAL
ACTION |
| 75 |
Delayed payment of
Service tax. |
Simple
interest at the rate 15% p.a. is payable
for any delay in payment of service
tax. |
| 75 A |
Failure to Register
within the specified time. |
Penalty
of Rs.500. |
| 76 |
Failure to pay Service
Tax. |
Penalty
not less than Rs.100 per day and not
more than Rs.200 per day, during which
period the failure continues, subject
to the ceiling of S.Tax. amount payable. |
| 77 |
Failure to file the
return. |
Penalty
which may extend to Rs.1000. |
| 78 |
Suppressing the value
of taxable service. |
Penalty
not less than the S.Tax payable and
not more than twice the amount of S.Tax
payable. Provided that if the S.Tax
and the interest thereon is paid within
30 days from the communication of the
order, the amount of penalty shall be
25% of the Service Tax so determined. |
| 78 |
Suppressing the value
of taxable service. |
Penalty
not less than the S.Tax payable and
not more than twice the amount of S.Tax
payable. Provided that if the S.Tax
and the interest thereon is paid within
30 days from the communication of the
order, the amount of penalty shall be
25% of the Service Tax so determined. |
| 79 |
Failure to comply
with notice |
Penalty
not less than 10% and not more than
50% of the S.Tax. |
|
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|
9. Would the Services provided abroad will
be liable for payment of Service Tax? |
|
No. The Services rendered abroad will not
attract Service Tax as the provisions of Service
Tax law extends the whole of India except
Jammu & Kashmir including territorial
waters. |
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