In the old days, Service Tax was a type of tax levied by the Indian government on certain commodities and services. A receiver or a provider can be the one who pays it. Service Tax, which was established under Section 65 of the Finance Act of 1994, was replaced in July 2017 by the Goods and Services Tax (GST), which incorporated all sorts of indirect taxes.
What is a Service Tax?
The government of India levies a service tax on particular service transactions carried out by the service provider. Final consumers, on the other hand, are the ones who pay the tax because it is transferred to them by service providers. The Finance Act of 1994 established the Service Tax, which is a sort of Indirect Tax. In exchange for various services received from service providers, service tax was paid to the government. Although service providers paid the tax, it was recovered from customers who purchased or used the taxable services. It was recently established at 15% for transactions that took place on or after June 1, 2016.
The Rollout of Service Tax
The service tax was introduced in the Union Budget of 1994 and went into force on July 1, 1994. From 1994 onwards, the number of services subject to the service tax was gradually enlarged. The tax included services supplied by air-conditioned restaurants, long- and short-term housing, guest houses, and other amenities.
The tax was imposed on both enterprises and individual service providers, according to regulations. Individuals paid the tax in cash, whereas businesses paid it on an accrual basis. It was only paid if an entity’s total value of the service provider exceeded Rs1 million in a particular financial year. The former state of Jammu and Kashmir was exempted from this new service tax rule. The Service Tax was paid using the GAR 7, which was once known as the TR6 Challan. Service Tax payments were accepted at designated bank branches. Another method of paying the service tax was to use the e-payment system.
Rules of Service Tax
The Service Tax Rules were developed by the Government of India under the Finance Act of 1994 for the assessment and collection of service tax in India. All service tax details in the country are governed by these guidelines.
Procedure to Pay Online Service Tax Payment
The Central Board of Excise and Customs also called CBEC, introduced a web-based payment gateway called Electronic Accounting System in Excise and Service Tax (EASIEST) in an attempt to make it easier for assessees to pay their service tax online.
- First of all, go to the official website of NSDL-EASIEST i.e., https://cbec-easiest.gov.in/EST/
- On the home page of the website, Select ‘e-Payment’.
- To pay your service tax online, enter the 15-digit Assessee Code issued by the jurisdictional Commissionerate.
- The code you submitted will be checked online, and if it is genuine, the screen will display information such as your name, address, Commissionerate code, and so on.
- The system will automatically select the type of payment you wish to make once you enter the Assessee code, i.e., Service Tax or Excise Duty.
- After that, you must choose ‘Select Accounting Codes for Service Tax.’
- After the data in theNSDL central system has been validated, the screen will provide a drop-down option with the names of various banks that offer net banking to pay your service tax online. You must select the bank through which you wish to make your online service tax payment.
- After you’ve input all of the required information, a confirmation screen will display, and if you confirm the information you’ve entered, you’ll be routed to the bank’s net banking site.
- After that, you must connect to your net banking account
- Enter the payment information, and complete the transaction.
- After you’ve completed the payment, a challan receipt will show on the screen, including the payment information, the Challan Identification Number, and the name of the bank you used to make the payment.
- The receipt, which contains all payment details and serves as an acknowledgment/proof, can be downloaded from the bank’s website.
Authorized Banks for Service Tax Payment
The RBI and the Pr. Chief Controller of Accounts (Pr. CCA) has allowed the following 27 banks to collect Service tax for all Commissioneratethrough internet banking i.e., e-payment.
|S. No.||Name of Bank||S. No.||Name of Bank|
|1.||State Bank of India||14.||Oriental Bank of Commerce|
|2.||State Bank of Hyderabad||15.||Punjab National Bank|
|3.||Bank of India||16.||ICICI Bank|
|4.||Bank of Maharashtra||17.||State Bank of Mysore|
|5.||Canara Bank||18.||Allahabad Bank|
|6.||Central Bank||19.||Bank of Baroda|
|7.||UCO Bank||20.||State Bank of Patiala|
|8.||Dena Bank||21.||State Bank of Travancore|
|9.||HDFC Bank||22.||Syndicate Bank|
|10.||State Bank of Bikaner& Jaipur||23.||Corporation Bank|
|11.||IDBI Bank||24.||Union Bank of India|
|12.||Indian Bank||25.||Indian Overseas Bank|
|13.||United Bank of India||26.||AXIS Bank|
Check Payment Status
After you have successfully paid your service tax online, go to https://onlineservices.cbec-easiest.gov.in/csi/indexl to check the status of your challan.
If the challan data is not available on the EASIEST website, you can write an email to firstname.lastname@example.org to file a complaint.
Billing for Service Tax
A service tax assessee must send a bill or invoice within 14 days of the day the taxable service was completed or the date the money was received for the service, whichever comes first, according to Rule 4A of the Service Tax Rules, 1994. The following information must be included on the invoice:
- Serial number
- Name of the service receiver
- Address of the service receiver
- Name of the service provider
- Address of the service provider
- Registration number of the service provider
- The amount of payable service tax must be noted on the invoice.
- Classification, description, and taxable service value of the rendered service
Exemption from Service Tax
Service tax exemption is available only if the following conditions are met:
- In the previous financial year, turnover was less than Rs.10 lakh.
- You can claim service tax exemption if the total value of taxable services provided by a service provider during the preceding financial year was less than Rs.10 lakh.
- In case the aggregate value of taxable services provided over the previous financial year is more than Rs.10 lakh, service tax exemption cannot be availed.
- Credit from CENVAT
- The service provider cannot claim CENVAT credit for taxes paid on inputs or input services used to supply the service for which he or she has received an exemption.
- Furthermore, CENVAT credit cannot be claimed on capital items purchased within the time of the exemption.
- Also, service tax providers who make use of the small-scale service tax exemption must pay an amount equal to the CENVAT credit they received, if any.
Penalties for Failure to Pay Service Tax
The central government may levy a penalty if you fail to meet the following conditions, as outlined in Sections 76, 77, and 78 of the Finance Act of 1994:
- If you fail to file your ST-3 Return by the deadlines of October 25th and April 25th of each year, you will be fined. In that instance, you will be subject to a penalty fee of up to Rs.2, 000, depending on the length of the delay.
- If a person fails to provide information or appear before a Central Excise Officer when summoned, a penalty of up to Rs.5, 000 or Rs.200 each day after the due date, whichever is larger, will be imposed.
- If you are a service provider and fail to register your service, you would be subject to penalties under section 77 of the Finance Act, 1994, which can be as high as Rs.5, 000. Because registration serves as an assessee’s identity and is required, you must register your services.
- If an assessee fails to retain or maintain the records of account and other papers required by service tax law, a penalty of up to Rs.5, 000 may be imposed.
- If a person fails to pay their taxes electronically, they would be subject to a penalty of up to Rs.5, 000.
- Non-payment or late payment of service tax results in a penalty cost.
- If a person produces an improper invoice or fails to substantiate their invoice with appropriate details, a penalty of up to Rs.5000 would be levied.
- If a person intentionally conceals the value of taxable services or makes deliberate misstatements about the service supplied, a penalty will be imposed.
Not only are there provisions in the service tax rules for applying penalties if you do not meet the above-mentioned standards, but there are also provisions for not imposing fines. If a person can show adequate grounds for their inability to pay service tax, they may be excluded from penalty costs under section 80 of the Finance Act, 1994.
The Customs and Excise Department can provide service tax refunds. This is accomplished through the Central Excise and Service Tax Web Portal Automation. Every six months, returns must be filed within 25 days after the period. Service Tax refunds are harder to achieve due to a large backlog of claims in the system. Refund requests are frequently denied, and even if they are allowed, the time it takes to process them can drive a person insane. Though an exporter can demand interest on the amount owed in the event of reimbursement delays, nothing is done on this front due to the government’s sporadic payments and a lack of understanding.
Filing Service Tax Returns
The Automation of Central Excise and Service Tax (ACES) web interface allows you to request a service tax refund from the Customs and Excise Department. Only when you have filed your service tax returns can you obtain a refund. Within 25 days at the end of each six months, the returns must be filed. After you’ve submitted your return, you’ll be able to figure out how much you paid in service tax on your exported goods and claim a refund. You can also apply the extra service tax to future tax liabilities via self-adjustment. For example, you have entitled to a service tax rebate of Rs. 45,000 for a specific assessment year, but you plan to pay the same amount in tax the following year. Rather than claiming the refund, you can self-adjust it and declare it in the Service Tax Return, saving Rs. 45,000 for the following year.
Making a Request for a Refund
By logging in and selecting ‘Create’ from the ‘Refund Request’ option on the ‘REF’ menu in your account, you can create a refund request on the ACES site. You can submit the form for a refund once you’ve filled in all of the required information, such as your registration number, address, commissioner information, and claim details. The agency will investigate the refund request and process it if it is deemed to be authentic.
You can monitor the status of your refund request by login into the ACES site where you submitted it. Sign in to your account by clicking on ‘Service Tax’ from the homepage. You will be able to see the ‘Check Status’ option and track your refund using your acknowledgment number from the refund request you created earlier if you have filed for a refund and the reimbursement has been accepted by the department. If you do not get your refund within three months of submitting your refund request, the government is obligated to pay you a simple interest rate of 6% on the outstanding amount until it is paid.
In India, who is obligated to pay service tax?
Service tax is owed by any organization, company, or individual who offers services that are not on the list of undesirable things.
Is the assessee code the same as the registration number, the “ECC” code, or the “STC”?
Yes, they are the same. Based on a PAN number or a temporary number, the assessee code is a 15-character identifying number assigned by the system to the Central Excise or Service Tax assessee (in cases where PAN could not be submitted). The 15-character assessee code will be printed on the assessee’s registration certificate.
What does G.A.R. -7 stand for?
This is a challan that is used for manually paying service tax. The challan is only available at authorized banks.
If I don’t pay my service tax on time, do I have to pay penalty fees?
Yes, you will be penalized if you do not pay your taxes on time.
What is the difference between a service tax and a sales tax?
Service is a type of indirect tax that recipients of various services pay to the government indirectly through service providers.
Is it possible to pay my service tax online?
Yes, you can pay your service tax online at the Central Board of Excise and Customs website. You’ll need an internet banking account for this.