Legal Framework governing Service Tax

 

Law relating levy of Service-tax is laid down under Section 64 to Section 94 of finance Act, 1994. Applicability of service tax is from 1st July, 1994. There is no separate Act governing service tax, as there is for income-tax like Income-tax Act, 1961 and other Acts.

Service tax laws are applicable to whole of India, including the installations, structures and vessels in the Continental Shelf and Exclusive Economic Zone of India, except the State of Jammu & Kashmir.

The provisions of Service-tax are governed by following Acts and Rules.

1. Service Tax Rules, 1994
2. Service Tax (Advance Ruling) Rules, 2003
3. CENVAT Credit Rules, 2004
4. Export of Services Rules, 2005
5. Service Tax (Registration of Special Category of Persons) Rules, 2005
6. Authority for Advance Rulings (Central Excise, Customs & Service Tax) Procedure Regulations, 2005
7. Taxation of Services (Provided from Outside India and Received in India) Rules, 2006
8. Service Tax (Determination of Value) Rules, 2006
9. Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007
10. Service Tax (Publication of Names) Rules, 2008
11. Service Tax (Provisional Attachment of Property) Rules, 2008

The Excise Department of the Central Government administers the Act.

The Government/CBEC (Central Board of Excise & Customs) has issued various i) notifications, ii) trade notices, iii) circulars and iv) orders, granting exemptions, abatements and giving clarifications on various issues.

For meanings of various terms, definitions of services and service providers etc, the Act refers to various other laws such as Architects Act, 1972, Motor Vehicles Act, 1988, Banking Regulation Act, 1949 etc. Words and expressions not defined in the Act but defined in Central Excise Act, 1944 or rules made there under, apply to Service Tax as well.

Index : my Blogs on Service Tax

Threshold limit for Service Tax

From 1st April, 2008 threshold limit under service-tax is ten lakh rupees. This limit has been raised from Rs. 8 lakhs vide notification no. 8/2008 (Service-tax) dated 1st March, 2008.

Threshold limit was first notified by Service Tax Notification no. 6/2005 dated 1st March, 2005. The limit was proposed at Rs.4 lakhs w.e.f. 1st April, 2005. Before 1st April, 2005 there was no threshold limit. All assessess providing taxable services were required to pay service-tax.

Vide Service Tax Notification no. 4/2007 dated 1st March, 2007, notification 6/2005 was amended and threshold limit was raised to Rs. 8 Lakhs.

Service Tax Threshold Limit Table

Dates of Taxable Service	Threshold Limit	Notification No.
1-7-1994 to 31-3-2005	Nil	Not Applicable
1-4-2005 to 31-3-2007	Rs.4,00,000/-	No. 6/2005-Service Tax dt. 1-3-2005
1-4-2007 to 31-3-2008	Rs.8,00,000/-	No. 4/2007-Service Tax dt. 1-3-2007
1-4-2008 onwards	Rs.10,00,000/-	No. 8/2008-Service Tax dt. 1-3-2008

Conditions for exemption are laid down under notification no.6/2005 dt. 1-3-2005.

Threshold limit is to be calculated from 1st April for every financial year. Threshold limit is not available if aggregate value of taxable services rendered from one or more premises exceeds the threshold limit in preceding financial year.

Exemption under notification 6/2005 is not apply to

1. taxable services provided by a person under a brand name or trade name, whether registered or not, of another person; or
2. such value of taxable services in respect of which service tax shall be paid by such other person and in such manner as specified under sub-section (2) of section 68 of the said Finance Act read with Service Tax Rules,1994.

Conditions subject to which exemption is available :

1. the provider of taxable service has the option not to avail the exemption contained in this notification and pay service tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year;
2. the provider of taxable service shall not avail the CENVAT credit of service tax paid on any input services, under rule 3 or rule 13 of the CENVAT Credit Rules, 2004 (herein after referred to as the said rules), used for providing the said taxable service, for which exemption from payment of service tax under this notification is availed of;
3. the provider of taxable service shall not avail the CENVAT credit under rule 3 of the said rules, on capital goods received in the premises of provider of such taxable service during the period in which the service provider avails exemption from payment of service tax under this notification;
4. the provider of taxable service shall avail the CENVAT credit only on such inputs or input services received, on or after the date on which the service provider starts paying service tax, and used for the provision of taxable services for which service tax is payable;
5. the provider of taxable service who starts availing exemption under this notification shall be required to pay an amount equivalent to the CENVAT credit taken by him, if any, in respect of such inputs lying in stock or in process on the date on which the provider of taxable service starts availing exemption under this notification;
6. the balance of CENVAT credit lying unutilised in the account of the taxable service provider after deducting the amount referred to in sub-paragraph (v), if any, shall not be utilised in terms of provision under sub-rule (4) of rule 3 of the said rules and shall lapse on the day such service provider starts availing the exemption under this notification;
7. where a taxable service provider provides one or more taxable services from one or more premises, the exemption under this notification shall apply to the aggregate value of all such taxable services and from all such premises and not separately for each premises or each services; and
8. the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed rupees four lakhs in the preceding financial year.

Explanatin “aggregate value not exceeding four lakh rupees” means the sum total of first consecutive payments received during a financial year towards the gross amount, as prescribed under section 67 of the said Finance Act, charged by the service provider towards taxable services till the aggregate amount of such payments is equal to four lakh rupees but does not include payments received towards such gross amount which are exempt from whole of service tax leviable thereon under section 66 of the said Finance Act under any other notification.

 Index : Blogs on Service Tax

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Due Dates for Filing Half yearly Return

Due Date for Filing of Half Yearly return
Service Tax return is to be filed for has yearly period from 1st April to 30th September and 1st October to 31st March. The return is to be filed in Form ST-3. Even Input Service Distributor is also required to file Form ST-3.
Table of Due Date for Filing Service Tax Return

Return for half year	Due date for filing original return	Due date for filing revised return
1st April to 30th September	25th October	24th January
1st Oct to 31st March	25th April	24th July

• Vide Circular No.63/12/2003-ST date 14th October, 2003; where the due date of payment of service tax or due date of filing service-tax return is a public holiday, the service provided may pay tax or file return on next working day immediately following the holiday
• Return is to be filed in triplicate in Form ST-3.
• It has to be accompanied with copies of payment of tax in Form TR-6 or GAR-7 for month/quarter covered under the respective half year
• Filing of return is mandatory even for those assessee's who have not rendered service during the half year and no service tax is payable.
• Half yearly return can be filed electronically. The procedure for filing electronic return is laid down in Circular no 97/6/2007-ST dated 23-8-2007.
• Electronic filing of return is optional for all categories.
• Failure to file return within due date will result in penalty under Rule 7C
• under Rule 7B an assessee can file revised return to correct andy mistate or omission. Revised return can be filed within 90days from due date of filing original return.

Index of Blogs on Service Tax

Due Date for Payment of Service Tax

Due date for Payment of Service Tax

• Where the service tax provider is a Individuals, Proprietary Firms and Partnership Firms the service-tax is payable for each quarter by following dates.

Service-tax Due Date Table:

Quarter	Service-tax payable by	Where Service Tax is paid electronically
April to June	5th July	5th July
July to September	5th October	5th October
September to December	5th January	5th January
January to March	31st March	31st March

• Where service provider is any other service provider

Service-tax Due Date Table: 

Month	Service-tax payable by	Where Service Tax is paid electronically
April	5th May	6th May
May	5th June	6th June
June	5th July	6th July
July	5th August	6th August
August	5th September	6th September
September	5th October	6th October
October	5th November	6th November
November	5th December	6th December
December	5th January	6th January
January	5th February	6th February
February	5th March	6th March
March	31st March	31st March

1. For tax deposit electronically through internet banking, payment can be made on 6th instead of 5th [Notification No.39/2007 dated 12-9-2007]
2. Service-tax payable is amount received form the clients/service users, during the quarter. The amount bill is not to be taken into account for calculating the amount payable for the quarter. But the amount of service tax actually paid by clients on the services billed is to be paid as service tax payable for the quarter. Thus, if bill is issued in one quarter and the amount is paid by the client in next or any other quarter, then the tax is to be paid in quarter in which the client has paid the amount of service tax. [Finance Act, 2008.]
3. If service tax paid by the Service Provider or Service Receiver is Rs.50 lacs or more during the previous year, or if service tax paid during the current year is Rs.50 lacs, then the service tax liability is to be discharged by making electronic payment through internet banking.
4. If Service Provider or Service Receiver, provides services or receives services form /in, more then one premises or office and each office or premises is separately registered, Rs.50 lacs would apply to each separate registered office or premises. However, in case of Large Taxpayer Unit (LTU), the cumulative service tax paid by all registered premises of each LTU will be taken in to consideration.
5. Service tax paid in Cash + Cenvat Credit Utilised would be taken into consideration while calculating the amount of Rs.50 lacs. [Circular No.88/06/2006 dated 6-11-2006]
6. RBI has clarified by that e-payment will be accounted on date paid if payment is made before 8 p.m. Else payment will be accounted for next date. [RBI instruction No. DGBA GAD No. H9561/41.07.003/2007-2008 dated 5th March, 2008.]
7. w.e.f. 10th May, 2008 when transaction of taxable service is with Associated Enterprise, payment received for taxable service include any amount credited or debited in books of accounts of a person liable to pay tax
8. When payment is not made electronically, service-tax is to be deposited in single copy Challan GAR- 7 at the designated bank. Challan GAR-7 is applicable form 1-4-2007. Before 1-4-2007 service tax was payable in  Challan TR-6 (on Yellow Paper)
9. If due date of payment happens to be a public holiday, assessee may pay the service tax on next working day immediately following the holiday [Circular No.63/12/2003 dated. 14-10-2003]

Index of Blogs on Service Tax

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Service Tax : Due Dates and or Time Limits

Registration

Within 30 days from the date on which service tax is levied or within 30 days of commencement of business of providing a taxable service, whichever is later.

Payment of Service Tax

• Where the service tax provider is a Individuals, Proprietary Firms and Partnership Firms the service-tax is payable for each quarter by following dates.

Service-tax Due Date Table:

Quarter	Service-tax payable by	Where Service Tax is paid electronically
April to June	5th July	5th July
July to September	5th October	5th October
September to December	5th January	5th January
January to March	31st March	31st March

• Where service provider is any other service provider

Service-tax Due Date Table: 

Month	Service-tax payable by	Where Service Tax is paid electronically
April	5th May	6th May
May	5th June	6th June
June	5th July	6th July
July	5th August	6th August
August	5th September	6th September
September	5th October	6th October
October	5th November	6th November
November	5th December	6th December
December	5th January	6th January
January	5th February	6th February
February	5th March	6th March
March	31st March	31st March

• Service-tax payable is amount received form the clients/service users, during the quarter. The amount bill is not to be taken into account for calculating the amount payable for the quarter. But the amount of service tax actually paid by clients on the services billed is to be paid as service tax payable for the quarter. Thus, if bill is issued in one quarter and the amount is paid by the client in next or any other quarter, then the tax is to be paid in quarter in which the client has paid the amount of service tax.
• w.e.f. 10th May, 2008 when transaction of taxable service is with Associated Enterprise, payment received for taxable service include any amount credited or debited in books of accounts of a person liable to pay tax

Filing of half yearly return
For half year 1st April to 30th September
—
By 25th October
For half year 1st October to 31st March
—
By 25th April


When payment is not made electronically, service-tax is to be deposited in single copy Challan GAR- 7 at the designated bank

Service Tax Interest Rates

 

In case of delay in payment of service tax, i.e. service tax is paid after due date; the assessee i.e. the tax-payer is required to pay interest at rate of 13% per annum. This rate is applicable vide Notification No. 26/2004 dated 10.09.2004 w.e.f 1st September, 2004.

Table of rates of interest payable on delayed payment of service tax during relevant period before 1-9-2004 is given below

 

 

Sr.No.	Period	Rate of Interest
1.	1-7-1994 to 11-05-2001	1.5% per month and part thereof
2.	12-5-2001 to 11-5-2002	24% per annum
3.	12-5-2002 to 10-9-2004	15% per annum
4.	From 1-9-2004	13% per annum

 

Index : Service Tax Blogs

 

Technorati Tags: Service Tax Interest Rate,Service Tax Interest Rate Chart

Service Tax Rates

The table below shows the rate of service tax applicable at the relevant period of time.

Service Tax Rate Chart, up to date

Sr. No.	Period	Rate of Service Tax	Rate of Cess
1.	01-07-1994 to 13-05-2003	5%	Nil
2.	14-05-2003 to 09-09-2004	8%	Nil
3.	10-09-2004 to 17-04-2006	10%	EC 2% of S.Tax
4.	18-04-2006 to 11-05-2007	12%	EC 2% of S.Tax
5.	12-05-2007 to 25-02-2009	12%	EC 2% of S.Tax & SHE 1% of S.Tax
6.	25-02-2009 to 31-03-2012*	10%	EC 2% of S.Tax & SHE 1% of S.Tax
7.	01-04-2012#	12%	EC 2% of S.Tax & SHE 1% of S.Tax

*  NOTIFICATION NO. 8/2009-ST Dated: February 24, 2009
# Notification No. 2/2012 Service Tax dated 17th March, 2012.

EC = Education Cess; SHE = Secondary and Higher Education Cess

Index : Service Tax Blogs

Service Tax : Service Categories and Accounting Codes

 

List of Service Categories subject to Service tax, the effective date of applicability of Service Tax  and Accounting Codes of Respective Services

Sr.No	Service Category	Date of Introduction	Accounting Codes
Tax Collection	Other Receipts	Deduct Refunds	Education Cess
1	Advertising	01.11.1996	440013	440016	440017	440298
2	Air Travel Agent	01.07.1997	440032	440033	440034	440298
3	Airport Services	10.09.2004	440258	440259	440260	440298
4	Architect	16.10.1998	440072	440073	440074	440298
5	ATM Operations, Management or Maintenance	01.05.2006	440346	440347	440348	440298
6	Auctioneers' service, other than auction of property under directions or orders of a court of or auction by Central Govt..	01.05.2006	440370	440371	440372	440298
7	Authorised Service Station	16.07.2001	440181	440182	440183	440298
8	Auxiliary to General Insurance/ Life Insurance	16.07.2001  /  16.08.2002	440169	440170	440171	440298
9	Banking & Other Financial Services	16.07.2001	440173	440174	440175	440298
10	Beauty Parlor	16.08.2002	440209	440210	440211	440298
11	Broadcasting	16.07.2001	440165	440166	440167	440298
12	Business Auxiliary Services	01.07.2003	440225	440226	440227	440298
13	Business Exhibition Service	10.09.2004	440254	440255	440256	440298
14	Business Support Services	01.05.2006	440366	440367	440368	440298
15	Cable Operator	16.08.2002	440217	440218	440219	440298
16	Cargo Handling	16.08.2002	440189	440190	440191	440298
17	Chartered Accountant	16.10.1998	440092	440093	440094	440298
18	Cleaning Service	16.06.2005	440318	440319	440320	440298
19	Clearing & Forwarding Agent	16.07.2001	440045	440046	440047	440298
20	Clubs and Associations	16.06.2005	440322	440323	440324	440298
21	Commercial or Industrial Construction	10.09.2004	440290	440291	440292	440298
22	Commercial Training or Coaching	01.07.2003	440229	440230	440231	440298
23	Company Secretary	16.10.1998	440100	440101	440102	440298
24	Construction of Complex	16.06.2005	440334	440335	440336	440298
25	Consulting Engineer	07.07.1997	440057	440058	440059	440298
26	Convention Centre	16.07.2001	440133	440134	440135	440298
27	Cost Accountant	16.10.1998	440096	440097	440098	440298
28	Courier Services	01.11.1996	440014	440018	440019	440298
29	Credit Card, Debit Card, Charge Card or other payment card related services	01.05.2006	440394	440395	440396	440298
30	Credit Rating Agency	16.10.1998	440088	440089	440090	440298
31	Custom House Agent	15.06.1997	440026	440027	440028	440298
32	Dredging	16.06.2005	440310	440311	440312	440298
33	Dry Cleaning	16.08.2002	440221	440222	440223	440298
34	Erection, Commissioning or Installation	01.07.2003	440233	440234	440235	440298
35	Event Management	16.08.2002	440197	440198	440199	440298
36	Facsimile	16.07.2001	440149	440150	440151	440298
37	Fashion Designer	16.08.2002	440213	440214	440215	440298
38	Forward Contract Services	10.09.2004	440282	440283	440284	440298
39	Franchise Services	01.07.2003	440237	440238	440239	440298
40	General Insurance	01.07.1994	440005	440006	440120	440298
41	Health Club & Fitness Centre	16.08.2002	440205	440206	440207	440298
42	Intellectual Property Service	10.09.2004	440278	440279	440280	440298
43	Interior Decorator	16.10.1998	440076	440077	440078	440298
44	Internet Cafe	01.07.2003	440241	440242	440243	440298
45	Internet Telephony Services	01.05.2006	440382	440383	440384	440298
46	Leased Circuit	16.07.2001	440137	440138	440139	440298
47	Life Insurance	10.09.2004	440185	440186	440187	440298
48	Mailing List Compilation and Mailing	16.06.2005	440330	440331	440332	440298
49	Management Consultant	01.07.1997	440116	440117	440118	440298
50	Maintenance or Repair Service	01.07.2003	440245	440246	440247	440298
51	Mandap Keeper	16.10.1998	440035	440036	440037	440298
52	Manpower Recruitment or Supply Agency	07.07.1997	440060	440061	440062	440298
53	Market Research Agency	16.10.1998	440112	440113	440114	440298
54	On-line Information & Database Access or Retrieval Service	16.07.2001	440153	440154	440155	440298
55	Opinion Poll Service	10.19.2004	440274	440275	440276	440298
56	Outdoor Caterer	10.09.2004	440051	440052	440053	440298
57	Packaging Service	16.06.2005	440326	440327	440328	440298
58	Pager	01.11.1996	440015	440020	440021	440298
59	Pandal or Shamiana Services	10.09.2004	440054	440055	440056	440298
60	Photography	16.07.2001	440129	440130	440131	440298
61	Port Service	16.07.2001	440177	440178	440179	440298
62	Public Relations Service	01.05.2006	440374	440375	440376	440298
63	Rail Travel Agent	16.08.2002	440201	440202	440203	440298
64	Real Estate Agent/Consultant	16.10.1998	440104	440105	440106	440298
65	Recovery Agent	01.05.2006	440350	440351	440352	440298
66	Registrar to an Issue	01.05.2006	440338	440339	440340	440298
67	Rent -a-Cab Operator	16.07.1997	440048	440049	440050	440298
68	Sale of space or time for Advertisement, other tan print media	01.05.2006	440354	440355	440356	440298
69	Scientific or Technical Consultancy	16.07.2001	440125	440126	440127	440298
70	Security Agency	16.10.1998	440108	440109	440110	440298
71	Share Transfer Agent	01.05.2006	440342	440343	440344	440298
72	Ship Management Service	01.05.2006	440378	440379	440380	440298
73	Site Preparation	16.06.2005	440306	440307	440308	440298
74	Sound Recording	16.07.2001	440161	440162	440163	440298
75	Sponsorship service provided to any body corporate or firm, other than sponsorship of sports event	01.05.2006	440358	440359	440360	440298
76	Steamer Agent	15.06.1997	440029	440030	440031	440298
77	Stock Broker	01.07.1994	440008	440009	440121	440298
78	Storage & Warehousing	16.08.2002	440193	440194	440195	440298
79	Survey & Exploration of Minerals	10.09.2004	440270	440271	440272	440298
80	Survey and Map Making	16.06.2005	440314	440315	440316	440298
81	T.V. & radio Programme Production Services	10.09.2004	440286	440287	440288	440298
82	Technical Testing & Analysis Agency. Technical Inspection and Certification Agency	01.07.2003	440249	440250	440251	440298
83	Telephone	01.07.1994	440003	440119	440122	440298
84	Telex	16.07.2001	440145	440146	440147	440298
85	Telegraph	16.07.2001	440141	440142	440143	440298
86	Tour Operator	01.09.1997	440063	440064	440065	440298
87	Transport of goods by Air	10.09.2004	440266	440267	440268	440298
88	Transport of goods by Road	01.01.2005	440262	440263	440264	440298
89	Transport of goods in container by rail (other than Indian railway)	01.05.2006	440390	440391	440392	440298
90	Transport of goods other than water, through Pipeline or other conduit	16.06.2005	440302	440303	440304	440298
91	Transport of passengers embarking on international journey by air, other than economy class passengers	01.05.2006	440362	440363	440364	440298
92	Transport of persons by cruise ship	01.05.2006	440386	440387	440388	440298
93	Travel Agent other than Air & Rail Travel	10.09.2004	440294	440295	440296	440298
94	Underwriter	16.10.1998	440084	440085	440086	440298
95	Video Tape Production Video Tape Production	16.07.2001	440157	440158	440159	440298

 

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