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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.
 
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.
- The Service Tax administration is with Central Excise Dept.
- Application shall be made in Form ST1 before proper Central Excise Officer.
- 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.
- If a person has more than one place of business and centralised billing system, he may opt to register where the billing is done.
- If an assessee provides more than one service he can get single registration.
- 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.
- No Registration fee is payable.
 
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.
 
4. What are the statutory requirements to be complied with?
- 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.

 
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.
 
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.
 
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.
 
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.
 
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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