Service tax tarun

HR Initiative for Team NeuSource
Service Tax
June 2014

“At Neusource, we always think of building a ‘Great Team’. We
want each player of our team as a star player. We wish to grow in
terms of a strong team; that is capable enough to mark its stamp
on the face of time. Thinking to achieve more sales or profits is just
a means to attain our larger goals of a ‘Great Team’.
A group becomes a team when each member is sure enough of
its individual roles & work with full capability towards common
goals. This ‘Training on the Go’ is also an initiative to develop
required working skill to make our each player a star.
Therefore Awake, Arise & Start to develop the Star in You; because
weak links don’t become part of a strong chain.”
Welcome….

• Sample of handout
Handout – Grab your Copy

• Origin
• Introduction
• Definition of Service
• Applicability of Service Tax
• Registration
• Point of taxation
• Important dates
• Reverse charge
• Negative list
Index

• Indian economy is the 11th largest economy in the world and
the third fastest growing even in today’s recession, after
China and Indonesia (Present growth rate around 5.5%)
• World is presently facing recession-II but Indian economy is
still a growth economy
• Agriculture, services and industry are the major sectors of
Indian economy
Origin

• Continued growth in GDP accompanied by higher rate of growth in service sector
Changing pie of GDP Growth
SECTORAL GROWTH
26%
27%
47%
During 1996-97
16%
28%56%
During 2008-09
14%
27%
59%
During 2011-12
Agriculture
Industry (incld construction)
Service

Service Tax is an indirect tax levied on services. It was imposed by Chapter
V of Finance Act, 1994, which was introduced by the then Finance Minister
Dr. Manmohan Singh
There is no separate “Service Tax Act”. It is imposed every year by making
amendments to the Finance Act, 1994
 Service tax is not a tax on profession, trade or employment but is in respect
of services rendered.
If there is no service, there is no tax.
Introduction

• Service means
• (i) any activity for consideration
• (ii) carried out by a person for another and
• (iii) includes a declared service
Definition of Service

(A)an activity which constitutes merely,—
(i) a transfer of title in goods or immovable property, by way of sale, gift
or in any other manner; or
(ii) such transfer, delivery or supply of any goods which is deemed to be
a sale or
(iii) a transaction in money or actionable claim;
(B) A provision of service by an employee to the employer in the course
of or in relation to his employment;
(C) fees taken in any Court or tribunal established under any law for the
time being in force
However, a service shall not include:-

 Service Tax is applicable to the whole of India except Jammu
and Kashmir.
 If a service provider provides taxable services in Jammu and
Kashmir, then it is not liable to Service tax. However, if a service
provider provides taxable services from Jammu and Kashmir to
the client any where else in the country, he shall be liable to
service tax.
RATE OF TAX
Service tax is 12% + Education Cess 2% + Secondary and Higher
Secondary Education Cess @ 1% = 12.36%
Applicability of Service Tax

• Every service provider in whose case, gross receipt has exceeded
`9,00,000 shall apply for registration to the Service Tax Department in
Form No ST-1 within 30 days from the date of crossing the limit of
`9,00,000, however, he will charge service tax after crossing the limit of
`10,00,000. He will also submit a copy of Permanent Account Number
and proof of residence. Department shall grant him a registration
certificate in Form No ST-2 within 7 days from the date of receipt of
application otherwise the service provider shall be deemed to be
registered.
• The service provider shall be given a Registration Number by the
Department which will be called STP code i.e. Service Tax Payer Code
and it will be 15 digit PAN based number and first 10 digit shall be that
of PAN and remaining 5 digit shall be allotted by Service Tax
Department e.g. AAEPC1298D – ST-001
Registration under Service Tax law

Q.
Suppose if a person is providing more than one taxable service,
does he required to register him self for each services rendered
by him?
Ans. He may give only one application. He should mention in the
application all the taxable services provided by him
Question

• A person may apply for voluntary registration at any time and
also a person may forgo (reject) the general exemption of
`10,00,000.
penalty
• Any person who has failed to take registration shall pay penalty
of `200 per day or `10,000 whichever is higher
Other points under registration

A service provider may apply for amendment in registration in
the following cases:
1. Change in place of business
2. Change in the name of business
3. Change in services rendered i.e. there may be addition /
deletion
4. Any other similar change
If there is any such change, service provider should apply to the
department within 30 days for effecting the change.
Amendment of Registration
Certificate

introduced with effect from 01.04.2011
Point of taxation means the point in time when a service shall be
deemed to have been provided
The point of taxation enables us to determine the rate of tax, value of
taxable service, rate of exchange and due date for payment of service
tax.
POINT OF TAXATION-
(from receipt basis to hybrid basis)

• The time when the invoice for the service provided or agreed to
be provided is issued;
• If invoice is not issued within prescribed time period (30 days
except for specified financial sector where it is 45 days) of
completion of provision of service, then the date of completion
of service;
• The date of receipt of payment where payment is received
before issuance of invoice or completion of service
Point of taxation is

• Due date for payment of service tax on the service which is
deemed to be provided (as per the Point of Taxation Rules, 2011)
by an individual or a proprietary firm or a partnership firm:-
Due date for payment of service tax

• Due date for payment of service tax on the service which is
deemed to be provided (as per the Point of Taxation Rules, 2011)
in any other cases (company and HUF):-
Due date for payment of service tax
Note: If the last day of payment of service tax is a public holiday, tax
can be paid on next working day

• Failure to pay service tax, including a part thereof within the
period prescribed, attracts simple interest at a rate not below
10% p.a. but not exceeding 36% p.a. as may be notified by the
Central Government
• Currently, the interest rate @ 18% per annum
• Concession of 3% for specified assesses : In case of a service
provider, whose value of taxable service provided in a financial
year does not exceed ` 60 lakh during any of the financial years
covered by the notice or during the preceding financial year, as
the case may be, such rate of interest shall be reduced by 3%
per annum.
Interest on delayed payment of
service tax

• The most concerning part about Service Tax is the Procedure for
Payment of Service Tax. When it comes to Service tax
• we have two options of payment of Service Tax i.e. we can
either make payment of Service Tax physically in the specified
banks or opt for online payment of service tax.
• for Physical Deposit of Payment of Service Tax in Bank through
GAR-7 Challan
• For online or e-payment of service tax, one should have a net
banking account with one of the authorized banks which are
mentioned in the list of banks authorised on
http://www.aces.gov.in/ePayment.jsp
Manner of payment

• every person liable to pay the service tax shall himself assess the
tax due on the services provided by him and shall furnish a return
in such form and in such manner and at such frequency as may
be prescribed. Rule 7 of the Service Tax Rules
• Manner of filing return
FILING OF RETURNS

• Under this scheme, service tax is payable by service recipient
instead of service provider. Under this charge service receiver
has to register himself under service tax. Further service receiver
can not claim general exemption limit of 10 Lakh rupees. So he
has to pay even on few rupees of service received
• It will be very harsh on service receiver end where he has
received services falls under reverse charge for only few
hundred rupees but due to it he has to register himself in service
tax and have to file service tax return on prescribed interval.
Moreover under service tax act Nil return is also mandatory and
every registered person have to file half yearly return
Reverse charge

Due dates for filing of service tax
returns
When the due date falls on public holiday: In case the due date of the
filing of return i.e., either 25th October or 25th April falls on a public
holiday, the assessee can file the return on the immediately succeeding
working day

• Insurance Business: In respect of services provided or agreed to
be provided by an insurance agent to any person carrying on
insurance business
• Transport of Goods By Road: in respect of services provided or
agreed to be provided by a goods transport agency in respect
of transportation of goods by road
• Sponsorship: In respect of services provided or agreed to be
provided byway of sponsorship
• Other services like an arbitral tribunal , an individual advocate or
a firm of advocates by way of legal services, Government or
local authority by way of support services n etc
Reverse Charge of service tax
applicable on following services:

• service tax shall be levied on all services, except the services
specified in the negative list there are 17 services covered under this
list
 Services provided by Government or local authority
 Services provided by Reserve Bank of India
 Services by a foreign diplomatic mission located in India
 Services relating to agriculture
 Trading of goods
 Processes amounting to manufacture or production of goods
 Selling of space or time slots for advertisements other than
advertisements broadcast by radio or television
Negative list of services

 Transmission or distribution of electricity
 Specified services relating to education
 Services by way of renting of residential dwelling for use as
residence
 Financial sector
 Service relating to transportation of passengers
 Service relating to transportation of goods
 Funeral, burial, crematorium or mortuary services including
transportation of the deceased
Negative list of services

Thank You
Please contact to let us know at
training@neusourceindia.com
about any
Query/ Suggestion/ Feedback/ Comment
Best mail shall be rewarded

Service tax tarun

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