Sunday, August 21, 2016

How to Pay Service Tax In India

How to Pay Service Tax In India?

You can pay service tax by using a G.A.R -7. This is a challan available in specified branches of particular banks. You need to fill the challan by putting all required information and submit it at your particular bank. However, you can also pay your service tax online by using the e-payment facility offered by the central Board of Excise and Custom. For e-payment, it is mandatory to have an internet banking account with any of the authorized banks.

Previously service tax was charged on cash basis from all service providers. But, now only individual providers have pay tax on cash basis. Companies have to pay it on accrual basis. They need to deposit tax as soon as they offer services to recipients. Service tax can be paid on quarterly basis by individuals and partnership firms. But, companies, society and trusts need to pay service tax on monthly basis.
How to File Service Tax Returns?

Usually, a service tax assessee needs to file two type of returns - ST-3 Return and ST-3A Return. ST-3 Return is applicable for registered assessee. ST-3A Return is applicable for those who make provisional assessment under rule 6(4) of the Service Tax Rules, 1994. You need to file ST-3 Return twice in a financial year on half yearly basis. You can file your service tax returns by furnishing the details of each month for which the return is filed. You need to furnish these details separately with Form ST-3. While filing your service tax returns, you can take the help of instructions stated in the application form. Your application form needs to be accompanied by a GAR-7 challan.

If you want to file your service tax returns online, first you need to register with ACES (Automation Central Excise and Service Tax) by visiting website of Central Board of Excise and Custom. Once, you register, the site will send you an user ID and password by using which you can log in to the site of central Board of Excise and Custom and get access to FORM ST-1. Then, fill up the online form by putting all required information and make an e-payment by using your chosen bank. You can also revise your service tax returns in order to correct an error or omit something. If you fail to file your returns within 15 days, from the prescribed due date of returns, you need to pay a penalty fee of Rs. 500. But, the penalty fee increases, if service tax returns get delayed beyond that.

Service Tax Penalties:

As per the provisions made under Sections 76, 77 and 78 of Finance Act, 1994, the central government may charge penalty, if you fail to meet the following conditions:
If you fail to furnish the ST-3 Return within the due dates which are 25th October and 25th April of every year. In that case, you will be liable to pay penalty fee which may extend up to Rs. 2000 based on the period of delay.
If a person fails to furnish information or appear before the Central Excise Officer when called for, he/she shall have to pay penalty up to Rs. 5000 or Rs. 200 per day after the due date, whichever is higher.
If you are a service provider and fail to register your service, it will draw penalty as per the regulations mentioned in section 77 of the Finance Act, 1994 and the penalty fee may go up to Rs. 5,000. Because, registration serves as an identity of an assessee and it is mandatory to register your services.
If an assessee fails to keep or maintain records of account and other documents required by service tax law, he/she shall be liable to pay penalty fee which may go up to Rs. 5,000.
If a person fails to pay tax electronically, he/she shall to pay penalty which may extend up to Rs. 5,000.
Penalty fee is also charged on non-payment or delayed payment of service tax.
Penalty shall be charged up to Rs. 5000, if a person issues an incorrect invoice or fails to support his invoice with valid details.
Penalty shall be charge if a person suppresses the value of taxable services or provides willful miss-statement about the service provided.

Not only there are provisions for imposing penalty if you fail to meet the above mentioned criteria, there are also provisions for not imposing penalty in the service tax rules. As per section 80 of the Finance Act, 1994, if a person can provide sufficient cause to support his failure to pay service tax, he/she can be exempted from paying penalty fees. However, insufficient funds or lack time are not considered as adequate causes to waive penalty.
What are the Exemptions Under Service Tax In India?

Normally, service tax is paid on all services except for those included in the negative list of services. All service providers including central and state government service providers as well as private sector service providers are liable to pay service tax. However, there are a few exceptional scenarios wherein service providers can avoid paying service tax. Listed below the major exemptions:
A small scale or individual service provider can enjoy service tax exemption, if its total turnover of taxable services does not go beyond Rs. 10 lakhs in a single a financial year.
The recipients are exempted from paying service tax for the goods and services received from the service provider, if there is written proof indicating the value of the goods and materials and no credit of duty is paid on such goods and materials, and if the services have been rendered under the CENVAT Credit rules.
Service tax is not applicable to the services provided to diplomatic missions and to the officers a diplomatic mission and their family members.
Services such as port services, goods transport services and containerised transport services received by an exporter and used for export of goods are not taxable. In such cases, service tax paid by an exporter on the above mentioned situations is refunded to the exporter.
Services provided to international organizations and the United Nations are not taxable.
Service tax is not applicable to the services provided to a developer of Special Economic Zone or a unit of Special Economic Zone.

Who is liable to pay service tax in India?

Any firm, company or individual who provides services which are not included in the list negative things is liable to pay service tax.

What kind of tax is service tax?

Service is a kind of indirect tax which the recipient of various services pay indirectly to the government via service providers.

Can I pay my service tax online?

Yes, you can pay your service tax online by visiting the website of Central Board of Excise and Custom. For that, you need to have an internet banking account.

Do I need to pay penalty fees, if I don’t pay my service tax on time?

Yes, penalty will imposed on you, if your fail to pay tax on time.

What is G.A.R -7?

This is a challan by using which you can pay service tax manually. The challan is available in particular authorized banks.

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