Service tax is, as the name suggests, a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government under the Finance Act, 1994. It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally, the service provider pays the tax and recovers the amount from the recipient of taxable service. However, in certain situations such as import of services (i.e., availing services from entities located outside India), the receiver of the Services is responsible for the payment of Service tax.
Who has to obtain service tax registration?
Service Tax is levied on the value of all services, other than those services specified in the negative list. So, those who provide services in India are required to obtain service tax registration. Secondly, in certain cases such as Goods Transport Agency (GTA), service tax is payable by the service recipient and in such cases, the receiver of the services is required to obtain service tax registration.
What is the service tax rate?
At present, the rate of Service Tax is 14% on the value of the taxable service (as applicable from 1st June 2015)
Is there any basic exemption limit from service tax?
A small service provider whose value of taxable services is less than Rs.10 Lakhs in the financial year is exempt from service tax. However, the service provider is required to register for service tax within 30 days of his turnover exceeding Rs.9 Lakhs.
When to pay service tax?
Service tax is paid quarterly or monthly based on the type of entity. For Individuals, partnership firms, Limited Liability Partnership (LLPs), the service tax is payable on quarterly basis and for others such as companies, it has to be paid on monthly basis.
What is the procedure to obtain service tax registration?
The application for service tax registration has to be filed online through the departmental website. On applying for registration online, the taxpayer is required to take a print of the Acknowledgement slip, sign and submit a hard copy of the form ST -1. Certain documents to verify the correctness of declaration in the said form as may be required by the registering authority, such as (self-certified) copy of PAN card, proof of address of business premise(s), constitution of the business [proprietorship, firm, company, trust, institute etc.] etc. to be submitted to the department. In case of doubts in select cases, original documents may have to be presented for across the counter verification and return. Upon successful submission, the taxpayer is allotted a 15 character service tax number.
Is PAN allotted by the Income Tax Department a must for obtaining Service Tax Registration?
Yes. PAN is essential because the Service Tax Registration number is generated based on the PAN issued by the Income Tax Department.
Is there any penal provision for non-registration?
A person, who fails to take registration within the time stipulated shall be liable to pay penalty which may extend to Rs. 10,000/-. Secondly, the tax dues are to be paid along with interest and penalty as per the provisions of the Act.
Is filing of return compulsory even if no taxable service provided or received or no payments received during a period (a particular half year)?
Filing of return is compulsory, even if it may be a nil return, within the prescribed time limit.
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