Presentation on Service Tax

13/04/2023 [email protected] 1

Presentation on

Service Tax For B Com (Taxation) students

of Goa University By

Dr. Sanjay P Sawant Dessai Associate Professor

Damodar College of Commerce and Economics Margao Goa


Contents

• Administration of the Act • Basic proposition • Composite Services• exemptions• Registration • Furnishing of returns• Rate of service tax • Payment of service tax


What is Service

‘Service’ has been defined in clause (44) of the new section 65B and means –• any activity• for consideration• carried out by a person for another• and includes a declared service.


Background

• Service tax introduced from 1st July 1994.• In 1994 only three services were under service

tax • Telephone• Stock broker• General insurance


Year wise service tax collection

• The first year collections was Rs 407 crore.• Rs 3,302 crore in 2001-02.• Rs 60,941 crore in 2008-09.• Rs 70,896 crore in 2010-11.• Rs 97, 444 crore in 2011-12• Rs. 132,601 crore in 2012-13


Rates of service tax • Initially rate of tax was 5 percent • From 2003 rates increased to 8 percent • From 2004 service tax rates were 10 percent plus 2

percent education cess • In 2006 service tax rates revised to 12 percent plus 2

percent education cess • From 2007 higher education cess of 1 percent was

introduced• From 2009 rated were reduced by 2 percent (10 plus 3

percent) • From 2012 , rates become 12 plus 3 percent cess


The Administration of the Act:

• The Act is administered by the Central Excise Department.


The Act does not extend to Jammu & Kashmir

The service tax was not levied in J&K till now to help the State’s economy recover from the aftermath of terrorism.1. The services provided by a person, having his business

premises in the State of Jammu & Kashmir and providing taxable service to the clients in other parts of the country would be liable for payment of service tax.

2. A person, having his business premises in any of the Indian States other than the State of Jammu & Kashmir who provides the services to the persons in the State of J & K, would not be liable to pay service tax.


Negative list

• From 01.07.2012, there is a paradigm shift in the levy of service tax.

• Service tax has been imposed on all services other than those specified in the negative list.

• There are 17 such services specified in the negative list.


Negative list

1. Services provided by Government or local authority2. Services provided by Reserve Bank of India3. Services by a foreign diplomatic mission located in

India4. Services relating to agriculture or agricultural produce5. Trading of goods6. Processes amounting to manufacture or production of

goods7. Selling of space or time slots for advertisements other

than advertisements broadcast by radio or television


8. Service by way of access to a road or a bridge on payment of toll charges.

9. Betting, gambling or lottery.10. Admission to entertainment events or access

to amusement facilities.11. Transmission or distribution of electricity by

an electricity transmission or distribution utility.


12. Services by way of –(i) pre-school education and education up to higher secondary school or equivalent;(ii) education as a part of a curriculum for obtaining a qualification recognized by law;(iii) education as a part of an approved vocational education course.13. Services by way of renting of residential dwelling for use as residence;14. Services by way of –(i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;(ii) inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;15. Service of transportation of passengers, with or without accompanied belongings, by –


• (i) a stage carriage;• (ii) railways in a class other than –• (A) first class; or• (B) an air conditioned coach;• (iii) metro, monorail or tramway;• (iv) inland waterways;• (v) public transport, other than predominantly for tourism purpose, in a vessel between• places located in India; and• (vi) metered cabs, radio taxis or auto rickshaws; 16. Services by way of transportation of goods –• (i) by road except the services of –• (A) a goods transportation agency; or• (B) a courier agency;• (ii) by an aircraft or a vessel from a place outside India up to the customs station of• clearance in India; or• (iii) by inland waterways;17. Funeral, burial, crematorium or mortuary services including transportation of the deceased


Composite Services

ABATEMENT (Partial exemption available to certain services )

Exemption from the gross amount charged in respect of different categories of taxable services such as-

• Transport of passengers by air with or without accompanied belongings where abatement of 60% of gross amount charged has been granted to the service provider

• Abatement of 75% of gross amount charged has been granted in case of service of transport of goods by road.


• Abatement of 70% of gross amount charged has been granted in case of service of transport of passengers by first class and air conditioned coach of rail;

• In case of renting of hotel, inn, guest-house etc. abatement of 40% of gross amount charged to the customer has been granted to the service provider


GENERAL EXEMPTIONS

In addition to services covered by negative list, there is a huge list of services which have been exempt from payment of service tax.1. Services provided to the United Nations or specified

International Organisations ,2. Health Care services by a clinical establishment or an

authorized medical practitioner3. Services by a veterinary clinic4. Services provided to or by an Educational institution in

respect of education5. Services provided to a Recognised Sports Body6. Services provided to SEZ etc.


Some of the organizations notified as International Organisations are as follows

1. International Civil Aviation Organisation.2. World Bank3. World Health Organisation (WHO).4. International Labour Organisation (ILO).5. U.N. International Children's Emergency Fund (UNICEF).6. The Joint Enterprise Aid in Mass Vaccination against T.B. in India.7. Food and Agriculture Organisation of the United Nations.8. U.N. Educational, Scientific and Cultural Organisation (UNESCO).9. International Monetary Fund (IMF).10. International Bank for Reconstruction and Development ((IBRD).11. Universal Postal Union.12. International Telecommunications Union.13. World Meteorological Organisation.14. U.N.T.A. Board. (United Nations Transitional Administration Board)15. International Atomic Energy Agency.16. World Tourism Organisation.17. Asian Development Bank.18. South Asian Association for Regional Co-operation (SAARC).


THRESHOLD EXEMPTION

• Exemption to Small Service Providers• Threshold exemption up to Rs. 10 lakhs• Option available to the service provider to avail exemption

from tax leviable on taxable services of aggregate value not exceeding the prescribed limit (original limit prescribed was 4 lakhs) in any financial year subject to the fulfilment of the conditions specified in the said notification.

• Threshold exemption is raised to Rs. 10 lakhs w.e.f. 1-4-2008.


Persons excluded from exemption benefit

Two categories of persons have been excluded from the benefits of this exemption:i) Persons using brand name/trade name of another personii)Where service tax is payable by certain specified persons other than service providers.


Exemption is linked with preceding year's turnover

• The condition for availing the exemption benefit is that the aggregate value of taxable services rendered by a provider of taxable service from one or more premises should not have exceeded Rs. 10 lakhs in the preceding financial year.


Registration

• No registration if turnover is less than Rs. 9 lakhs• As per the provisions of section 69(1) of the Act, every

person providing a taxable service and liable to pay service tax must mandatorily make an application for registration to the designated Superintendent of Central Excise within such time and in such manner and in such form as may be specified .

• In a few cases liability to pay service tax has been shifted to the service receiver or other specified person, in terms of section 68(2) of the Act, who shall make application for registration.


Persons Who Must Mandatorily Obtain Registration

i) Every person liable to pay service tax.ii) An input service distributor.iii) Every provider of taxable service whose

aggregate value of taxable service in a financial year reaches Rs. 9 lakhs.


Furnishing of returns,

• U/s 70(1) of the Act, every person liable to pay service tax shall himself assess the tax due on the services provided by him.

• Such person shall furnish to the Superintendent of Central Excise a return in the prescribed form prepared in the prescribed manner at the prescribed intervals.


Periodicity for Filing Return:

• Under Rule 7(1) This return is required to be filed on a half yearly basis. The half years for this purpose will cover the periods from 1st April to 30th September and 1st October to 31st March of the relevant year.


Due Date for Filing Return :

• The half yearly return should be filed in triplicate, on or before the 25th of the month following the particular half year as under:

• by 25th October for covering the half year from 1st April to 30th Sept.

• by 25th April for covering the half year from 1st Oct. to 31st March.

• If 25th Oct. Or 25th April happens to be a public holiday, the return can be filed on the immediately succeeding working day.


Rate of Service Tax,

• From 1.4.2012 the Service Tax Rate shall be 12% plus 2 percent Education Cess and 1 percent Secondary and Higher Education Cess of service tax

• Total service tax of 12.36%


Payment of Service Tax,

Service tax payable on accrual basis: w.e.f. 1.4.2011 service tax will be payable on the basis of date of billing or receipt of advance, whichever is earlier, and not on receipt basis.The service tax is required to be paid on monthly basis by all service taxpayers, other than individuals or proprietary /partnership concerns who are required to pay service tax on quarterly basis.


• Service tax liability for a particular month or quarter shall be paid to the credit of Government by the 5th or 6th day of the month or quarter immediately following the month or quarter.

• However, for the month/quarter ending March, the payment is required to be made by the 31st March itself by all taxpayers.


Penalty for Failure to pay Service Tax.

• Sec. 76 of the Finance Act provides for levy of penalty in addition to the tax/ interest.

• The person is required to pay such penalty in addition to the tax and interest due.


Imposition of penalty u/s 76 is mandatory, subject to the condition that it can be waived or reduced if reasonable cause was shown for such waiver u/s 80.If service tax and interest is paid before Show cause Notice, penalty cannot be imposed.From 8.4.2011 the penalty leviable is prescribed as 1. not less than Rs. 100 per day during which the failure continues,

or2. Amount calculated @ 1% per month on the tax due,

whichever is higher.However, such penalty would not exceed 50% the service tax payable.The period of default will start with the first day after the due date and will end with the date of actual payment of the outstanding amount of service tax.


Interest for late payment of service tax

• In case of delayed payment /deposit of service tax, there is mandatory payment of simple interest u/s 75

• With effect from 1-04-2011 the rate of interest is 18% p.a.


• Reduction of interest rate in case of small service provider:

• As per proviso to sec.75, w.e.f. 8.4.2011 the rate of interest shall be reduced by 3% in case of small service provider whose turnover does not exceed Rs. 60 lakhs. Thus, the rate of interest shall be 15% in case of small service provider.

Date post:	23-Jun-2015
Category:	Education
Upload:	sanjay-sawant-dessai
View:	385 times
Download:	0 times