FAQ-Service-Tax

FAQ-Service-Tax

1. What is Service Tax and who pays this tax?

Answer: It is a tax which is levied on the specified services by the government under the Act of Finance, 1994. Such as, the service provider pays the tax and recovers it from the customer.

It is an indirect tax, which the service provider pays and recovers the amount t from the taxable service. Now there is reverse Charge Mechanism is also according to that Service receiver will pay the taxes on the amount of service received.

2. Who is liable to pay service tax?

Answer: The person, who providing any type of taxable service is required to pay service tax to the government.

However, in the given conditions, the receiver of any type of services is responsible for the paying the Service tax:

  • The any foreign firm or business provides any type of taxable services without any establishment in India, the recipient of such services in India is liable to pay Service Tax.
  • The Service Tax is also paid by the Insurance Company.
  • For the taxable services provided by a Goods Transport Agency for transport of goods by road, the person who pays or is liable to pay freight is liable to pay Service Tax, if the consignor or consignee falls under any of the seven categories viz. (a) a factory (b) a company (c) a corporation (d) a society (e) a co-operative society (f) a registered dealer of excisable goods (g) a body corporate or a partnership firm.
  • The taxable services, which is provided by Distributors of Mutual Fund is to be paid the tax by the Mutual Fund or the Asset Management Company receives such service.
  • [Refer: Sec. 68 (2) of the Act read with Rule 2(1) (d) of the Service Tax Rules, 1994.]
3. Under the authority, what service tax is imposed?

Answer: Vide Entry 97 of Schedule VII of the Constitution of India, the Central Government of India levies service tax through Chapter V of the Finance Act, 1994. The taxable services are defined by the Central Government of India in Section 65 of the Finance Act, 1994. Section 66 is the charging section of the said Act.

4. What are the Taxable Services, can I have a list of such services within this software?

Answer: Yes, you can get a list from our software as per Taxable Services that have been specified under Section 65(105) of the Finance Act, 1994. All the taxable services as on 01.05.2011 are listed in Appendix-1. The list also shows the relevant Accounting Heads required to be mentioned in the tax payment documents (GAR-7), while depositing the Service Tax and other related dues in the banks.

5. What is the rate of Service Tax?

Answer: At the present time, on the value of taxable service, the current rate of Service Tax is 14.00%.

6. How will I know if I have filled my returns correctly?

Answer: On the website of ACES (i.e. Automation of Central excise and Service tax) one can view and verify the return submitted by him by directly logging on site from our software and then going to Return > View ST-3.

7. How can I amend or change my saved ST-1 Return?

Answer: You can access saved ST-1 Return for amendment by clicking on 'amend ST-1' option of Fill ST-1 submenu under 'Return' menu. Once ST-1 Return is submitted in ACES, it cannot be amended again.

8. How can I revise my ST-3 Return?

Answer: You can revise your ST-3 return once within 90 days after filing the original return, in our software you can do so by clicking on 'Revise ST-3' option of Fill ST-3 submenu under Return menu.

9. Is PAN allotted by the Income Tax Department a must for obtaining Service Tax Registration?

Answer: Having the PAN is very important because, without PAN, you can’t generate the Service Tax Code. The PAN based Service Tax Code/Registration number is must for payment of service tax using the G.A.R. 7 Form.

10. What are the steps for filing Return through offline utility?

Answer: The steps are as follows:

Fill up the Return data: Fill up each field of every section in the sheet to provide applicable data in the correct format.

Validating Sheets: Click on the E-Return Excel button and save it on your preferable location than Validate the excel sheet to ensure that the sheet has been properly filled and also data has been furnished in proper format. If there are some errors occur on the excel sheet, the Utility will prompt you about the same. In such cases, the offline utility will not allow you to proceed further until you rectify the errors.

Generate XML: There is "Validate Return and Submit" button on last sheet "Challan" for validating all the entries in your return. If you click on this button, the utility will validate all the sheets one by one and also perform inter-sheet validations. After validation, an XML will be generated. In case there is some error identified on some sheet, the utility will prompt you about the same and lead you to the respective sheet(s). Both files are saved in the same folder on your system where Efiling Utility is placed/ saved (while downloading the e-filing utility).

Upload XML file to ACES application: For uploading the XML generated by the E-filing Utility, login to ACES application and access menu option to upload generated xml file of Return. On Upload screen provide the required information and browse to select the relevant XML file and submit the form.

11. How do I file a NIL return in offline utility?

Answer: you will get an option for NIL Return in the first sheet. In case you are filing a NIL Return then change this option to "Yes". On selection of "Yes" option, a utility will ask you to freeze the option and then delete all the sheets that are not applicable.

12. In ST-3 Offline Utility when I enter premises code, an error appears "Premises code Number accepts only 10 digits alphanumeric characters". Please help.

Answer: During the online utility you need to ensure that you are entering the 10 character premises code. The system does not accept more and less than or than 10 character code. This code can be alphanumeric (all numeric, alphabetic or alphanumeric). The structure of 10 character premises code is the combination of Location Code of 6 characters and 4 other alphanumeric characters.

User can check the premises code through RETURN > Fill ST-3 > Fill (Check premises code here).

13. How do I upload my return?

Answer: In our software there are three options available to upload the Return

  • a) E-Return Excel - Generate excel directly from our software save it and do the validations and generate XML file
  • b) E-Return XML - Direct Generation of XML facility is also there to upload return
  • c) E-Return online - Fill data Online on ACES Portal directly from the software
14. How can I pay duty through the online payment process?

Answer: We are having a generation of GAR-7 Challan directly from our software. You can online pay your dues directly from our software.

15. How can I utilize my cenvat credit available?

Answer: Yes, you can do so with our software by going to "Cenvat credit" option you have to insert details of Cenvat credit available for the quarter /month, which you want to adjust in respect of payment due. You can maintain the records of Cenvat Credit through Cenvat Credit Register.

16. Whether the details of abatement and notification are required to insert each and every time in calculation of service tax due.

Answer: No, we have already updated our software with latest updations and notifications provided by the department .But in case of special abatement on a particular service of yours you can add details of abatement and notifications on your own in our abatement section.

17. Is the value added tax imposed by States required to be included for the purpose of service tax?

Answer: For the purpose of service tax, State Value Added Tax (VAT) has to be excluded from the taxable value.

18. What are the statutes governing the taxation relating to Service Tax?

Answer: The Statutes governing the levy of Service Tax are as follows:

  • The Finance Act, 1994 - Chapter V - Section 64 to 96 I. (Also referred to as "Act" in the book). This chapter extends to the whole of India except the State of Jammu and Kashmir.
  • The Finance Act, 2004 Chapter VI - for levy of Education Cess @ 2% on the Service Tax.
  • The Finance Act, 2007 – for levy of Secondary and Higher Education Cess of 1% on Service tax.
  • The Service Tax Rules, 1994. (Also referred to as "Rules" or "STR, 1994" in the book).
  • The CENVAT Credit Rules, 2004.
  • The Export of Service Rules, 2005.
  • The Service Tax (Registration of Special categories of persons) Rules, 2005.
  • The Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 (with effect from 19th April, 2006) – Notification No. 11/2006-ST dated 19.4.2006 as amended vide Notfn.No.31/2007 – ST dated 22.05.2007.
  • The Service Tax (Determination of Value) Rules, 2006 (with effect from 19th April, 2006) – Notification No. 12/2006-ST dated 19.4.2006 as amended vide Notfn.No.24/2006 – ST dated 27.06.2006 and Notfn.No.29/2007-ST, dated 22.05.2007.
  • Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007-Notification No. 32/2007-Service Tax dated 22nd May, 7 as amended by Notification No. 07/2008-St dated 1st March, 2008.
  • Service Tax (Removal of Difficulty) Order, 2010 effective from 22.6.2010.
  • Point of Taxation Rules 2011.
19. What should be done in case of change in the office/place of business?

Answer: Any change in premises/office, as mentioned in Form ST-1, should be intimated to jurisdictional Assistant/Deputy Commissioner Central Excise and it is given in our software.

20. When is Service Tax is required to be paid?

Answer: 1. If Payment made through Bank:

Category Frequency Due Dates
In case of Individuals,
Proprietary Firms &
Partnership Firms
Quarterly as mentioned below -
(i) For Q.E. 30th June
(ii) For Q.E. 30th Sept.
(iii) For Q.E. 31St Dec.
(iv) For Q.E. 31st March
- by 5th July
- by 5th Oct
- by 5th Jan.
- by 31st March
Others (e.g. Companies, Societies, Trusts etc.) Monthly By 5th of the month immediately following the month in which payments are received towards the value of taxable services. However, in case of March, the payment should be made by 31st March.
  • 2. If Payment is made through internet:
  • Category Frequency Due Dates
    In case of Individuals,
    Proprietary Firms &
    Partnership Firms
    Quarterly as mentioned below -
    (i) For Q.E. 30th June
    (ii) For Q.E. 30th Sept.
    (iii) For Q.E. 31St Dec.
    (iv) For Q.E. 31st March
    - by 6th July
    - by 6th Oct
    - by 6th Jan.
    - by 31st March
    Others (e.g. Companies, Societies, Trusts etc.) Monthly By 6th of the month immediately following the month in which payments are received towards the value of taxable services. However, in case of March, the payment should be made by 31st March.

    21. What is GAR-7 Challan? Where is it available?

    Answer: GAR-7 Challan is the document for payment of service tax. You can get this challan through our software.

    22. Can service tax be paid by cheque?

    Answer: Yes, service tax can be deposited by cheque. [Rule 6(2A) of Service Tax Rules,1994]

    23. What are the returns a Service tax Assessee has to file?
    Answer:
    • ST-3 Return: For all the registered assessee, including Input Service Distributors, (Ref.  Section 70 of Finance Act 1994 and Rule 7 of Service Tax Rules, 1994 read with Notfn.No. 14/2007-ST dated 02.04.2007).
    • ST-3A Return: The assessee who is making provisional assessment under rule 6(4) of the Service Tax Rules, 1994.
    • And all These Forms are available in our software.
    24. Is there any penalty for non-filing or delayed filing of the Returns?

    Answer:

  • If a person fails to file the ST-3 Return by the due date [25th October and 25th April every year], he shall be liable to penalty which may extend to Rs. Ten thousand rupees (Section 77 of the Act)
  • Mandatory Penalty for Late filing of ST-3 Return under Rule 7C of Service Tax Rules, 1994 (Section 70 of the Act)
  • S. No. Period of Delay from the prescribed date Penalty
    1. 15 days Rs.500/-
    2. Beyond 15 days but not later than 30 days Rs.1000/-
    3. Beyond 30 days Rs.1000/- plus Rs. 100/- for every day from the thirty first day till the date of furnishing the said return (not exceeding Rs.20000)

    25. What is the procedure for claiming refund?

    Answer: Please follow below mentioned steps for Refund Calim:

    • (1) Application in the prescribed form (Form - R) is to be filed in triplicate with the jurisdictional Asst./Deputy Commissioner of Central Excise/Service Tax.
    • (2) The application should be filed within one year from the relevant date as prescribed in Section 11B of the Central Excise Act, 1944 which has been made applicable to Service Tax refund matters also.
    • (3) Application should be accompanied by documentary evidence to the effect that the amount claimed as refund is the amount actually paid by him in excess of the Service Tax due and the incidence of such tax claimed as refund has not been passed on to any other person.
    26. What is CENVAT Credit Scheme with reference to Service Tax assessees?

    Answer: The CENVAT Credit Rules, 2004, is introduced with effect from 10.9.2004, provides for availment of the credit of the Service Tax paid on the input services/Central Excise duties paid on inputs/capital goods/Additional Customs duty leviable under section 3 of the Customs Tariff Act, equivalent to the duties of excise. Such credit amount can be utilized towards payment of Service Tax by an assessee on their output services. (Refer to Rule 3 of CENVAT Credit Rules, 2004). Such credit availed by a manufacturer can also be utilized for discharging their liability towards Service Tax and / or Central Excise duties [Refer Rule 3 of CENVAT Credit Rules, 2004 read with Notfn.,No.27/2007-CE(NT) dated 12.05.2007].

    27. What are the duties / taxes that can be availed as credit?

    Answer: As mentioned in answer of Query 29, Duties paid on the inputs and capital goods, and the Service Tax paid on the "input" services can be taken as credit.

    • Education Cess paid on the Excise duty and Service Tax can also be taken as credit. However, the credit of such Education Cess availed can be utilized only for payment of Education Cess relating to output service.
    • The interest and penalty amounts cannot be taken as credit.
    28. What are the documents prescribed for availment of the CENVAT Credit?

    Answer: The documents on which CENVAT credit can be availed are as follows:-

    • (1) Invoice issued by the manufacturers and his depot/ consignment agents.
    • (2) Invoice issued by the Importer and his depot/consignment agents
    • (3) First stage and Second stage dealer registered with the Central Excise Department.
    • (4) Bill of Entry
    • (5) Invoice/Bill/Challan issued by the provider of input Services
    • (6) Invoice/Bill/Challan issued by the Input Service distributor.
    • (7) Certificate issued by the Appraiser of Customs in respect of the goods Imported through Foreign Post Office.
    • A Challan evidencing payment of service tax by a person liable to pay service tax in the service category of auxiliary insurance, goods transport, recipient of service from a foreign country and sponsorship.
    29. What is Cenvat summary?

    Answer: As per Cenvat register we are showing you Cenvat Summary Periodically. You can check monthly or annually Cenvat aredit available.

    30. Can I check my taxability details service wise?

    Answer: yes we are having the option in our software to view tax and service wise summary so that you will be able to view details of amount due.

    31. What about interest calculation?

    Answer: Auto Interest Calculation Facility is also available.

    32. Can I take the printout of my uploaded return?

    Answer: Yes printing of ST-3 Return is also available. You can download your ST-3 Return from our software.

    33. Can I check my ST-3 in summarized form?

    Answer: In Reports Section we have provided a ST-3 summary to check summarized details of Total amount of services and amount due.

    34. Can I check my return status and download acknowledgement from the software?

    Answer: Yes, you can check your return status and download acknowledgement from our software.

    35. Can I save Login details with return filling dates of client?

    Answer: In reports section, go to returns select Period and you can view a list of clients with return filing dates and login details.