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Service Tax Procedural Aspects

Service Tax Procedural Aspects. By Surender Gupta, FCA 9810476895 22451509, 20008128 Email: sarrca@rediffmail.com e-book: - www.taxmanagementindia.com. Registration Requirements General Provisions. Section 69 and Rule 4 Every Person who is liable to pay service tax

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Service Tax Procedural Aspects

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  1. Service TaxProcedural Aspects By Surender Gupta, FCA 9810476895 22451509, 20008128 Email: sarrca@rediffmail.com e-book: - www.taxmanagementindia.com Surender Gupta, FCA, DISA (ICA)

  2. Registration RequirementsGeneral Provisions Section 69 and Rule 4 • Every Person who is liable to pay service tax • Application shall be filing to Superintendent of Central Excise • Form of Application is ST-1 • Within 30 days • Registration shall be issued within 7 days in form ST-2 Know Your Location: - logon to: www.exciseandservicetax.nic.in Document to be Submitted: - - Cont…. Surender Gupta, FCA, DISA (ICA)

  3. Registration RequirementsDocuments to be submitted with ST-1 As per Hyderabad-IV, Trade Notice No. 76/2003, dated 6-11-2003 (a) Proof of address of the premises office sought to be registered (b) PAN number of the assessee (c) List of Branches offices or premises of the assessee (d) Brief note on accounting system adopted by the assessee (e) Branch-wise series of invoices maintained along with a sample copy thereof (f) Previous years audited balance sheet along with gross trial balance of different branches (g) Details of records accounts maintained at different branches and Central Office (h) Bank account numbers of the Branches and Central Office through which the receipts are deposited transacted. Surender Gupta, FCA, DISA (ICA)

  4. Registration RequirementsCentralizsed Registration • If the assessee does not want to apply for separate registration for each premises and like to have single centralised registration instead; • He may apply for centralised registration on the basis of centralised billing or accounting basis • In such case the registration shall be granted by the: Commissioner or Chief Commissioner of Central Excise or Director General of Service Tax • Registration granted earlier shall be valid – F.No. 341/20/2005 Surender Gupta, FCA, DISA (ICA)

  5. Registration RequirementsSpecial Categories • Input Service Distributor • A person who is availing exemption on the basis of value of services provided – i.e. upto Rs. 4 lakh – Not. 6/2005 He has to file an application for registration when aggregate value of taxable service exceeds three lakh rupees. Notification No. 26/2005 and 27/2005 ST dated 07-06-2005 Surender Gupta, FCA, DISA (ICA)

  6. Registration RequirementsSurrender / Penalties • As per rule 4(7) – Every registered assessee, who ceases to provide the taxable service for which he is registered, shall surrender his registration certificate immediately. • No Specific Penalty for failure to obtain registration or surrender the same (Since Section 75A has been omitted) • However, in accordance with Section 77 – A penalty of Rs. 1,000 may be imposed on such failure. Surender Gupta, FCA, DISA (ICA)

  7. Registration RequirementsFAQs • Where more than one service is provided? • Registration applied but registration certificate not received? • Deposit of Service Tax before applying for Registration. • Whether penalty is mandatory? • What happened when premises is changed? • A sole proprietor is maintaining two business in two different names • What is service tax code Surender Gupta, FCA, DISA (ICA)

  8. Classification of Services vs. Service Tax Code • Item no. 4 of the ST-1 form requires details in respect of Category of Servcie • Category of Service must be determined after applying the provisions of Classification as prescribed in Section 65A • Classification according to the terms of clause 65(105) • Specific description is preferred over more general description • Composite Service – Which gives them essential character • Have equal merits – Which occurs first is better Surender Gupta, FCA, DISA (ICA)

  9. Important Dates Payment of Service Tax • In case of Individual / Proprietary Firm or Partnership firms (except quarter ending March) - Quarterly by the 5th of the month immediately following the said quarter. • In other cases (Except month ending March) By the 5th of the month immediately following the said calendar month. • In the both the above cases for the month of March or Quarter ending March By the 31st day of March of the calendar year. Surender Gupta, FCA, DISA (ICA)

  10. Important Dates Filing of Returns • Return of Service Tax to be filed Half Yearly – ST-3 • For 1st April to 30th September • Due Date - 25th October • For 1st October to 31st March • Due Date - 25th April • Input Service Distributor For 1st April to 30th September • Due Date - 30th October • For 1st October to 31st March • Due Date - 30th April Surender Gupta, FCA, DISA (ICA)

  11. Payment of Service Tax TR-6 Challan • Service Tax can be paid either by TR-6 challans or by utilizing Cenvat Credit • If paid through TR-6 Challan • Duty should be rounded of to nearest Rupee • Payment Shall be made in respect of payment received • Accounting Codes must be used correctly • Uniform code for Education Cess – 00440297 • Payment should be deposited in the designated banks only. • For the list of designated banks you may logon to: www.exciseandservicetax.nic.in Surender Gupta, FCA, DISA (ICA)

  12. Payment of Service Tax Cenvat Credit • Cenvat credit available at the end of month or quarter as the case may be, can be utilized for payment of service tax for that relevant month or qurter. • If there is shortfall in Cenvat Credit, the balance amount can be paid through TR-6 challans. • Cenvat credit can not be utilised to pay interest and penalties. These can be paid through TR-6 Challan only Surender Gupta, FCA, DISA (ICA)

  13. Payment of Service TaxInterest and Penalty • Rate of Interest for Late Payment of Tax – Sec. 75 • 13% p.a. on the outstanding amount • Penalty for Late / Non payment of Tax – Sec.76 • Minimum Rs. 100 per day • Maxmium Rs. 200 per day during which the failure continues or amount of Service Tax in default. • Reasonable Cause – Sec. 80 • No penalty is imposable if assessee proves that there was reasonable cause for the failure Surender Gupta, FCA, DISA (ICA)

  14. Payment of Service TaxInterest and Penalty • Penalty for suppressing value of taxable service – Sec. 78 • Amount of Penalty • Minimum Penalty - equal to amount of such service tax • Maximum Penalty - twice the amount of such service tax • Penalty is reduced to 25% of service tax if paid with in 30 days. • When the penalty under section 78 is imposed • Penalty under section is imposed, where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of (a) fraud; (b) collusion; (c) wilful mis-statement; (d) suppression of facts; or(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax Surender Gupta, FCA, DISA (ICA)

  15. Payment of Service Tax FAQs • What will happen if an assessee uses the wrong code on the Challan? • Whether single challan is sufficient for more than one services? • Whether single challan is sufficient for more than one premises? • What will happen when the service tax has been deposited with the non-designated bank? • What will happen where the service tax paid in advance? Is it available for adjustment in future? • Effect on Due date when payment is made by account payee cheque. • Mention of Service Tax code is mandatory or not as some times required by designated bank. Surender Gupta, FCA, DISA (ICA)

  16. Records and ReturnsAccounts and ST-3 • No specific requirement to maintain special records • Rule 5(1) – A list of accounts maintained by the assessee shall be filed alongwith the first return • Form of the Return – ST-3 • Enclosures to the return • ST- 3A • TR- 6 Challan Surender Gupta, FCA, DISA (ICA)

  17. Records and ReturnsInvoice • Though no records have been provided, but the some elements to be shown on the invoice have been provided by the rule 4A. According to rule 4A the following particulars are required to be mentioned on the invoice: • Invoices should be serial numbered; • Name, address and the registration number of such person; • Name, address of the person receiving taxable services; • Description, classification and value of taxable service provided or to be provided; and • Service Tax Payable Thereon • It is worthwhile to note here that Invoice includes any bill or challan issued by the provider of services for the services rendered by him. Surender Gupta, FCA, DISA (ICA)

  18. Records and ReturnsInvoice of Input Service Distributor • Every input service distributor shall issue an invoice, a bill or, as the case may be, a challan for each of the recipient • It should be serially numbered; Particulars of Provider of Input Services • Name; • Address; • Registration; • Serial number and date of invoice, bill, or as the case may be, challan issued under sub-rule (1); Cont….. Surender Gupta, FCA, DISA (ICA)

  19. Records and ReturnsInvoice of Input Service Distributor Particulars of Input Service Distributor • Name; • Address; and • Registration number Particulars of Recipient of credit distributed • Name; • Address Value • the amount of the credit distributed Surender Gupta, FCA, DISA (ICA)

  20. Records and ReturnsCenvat Credit • For Inputs and Capital Goods: - The provider of output service shall maintain proper records containing the following details: • Receipt; • Disposal; • Consumption; • Inventory of Input and Capital Goods; • Value of input / capital goods; • Duty paid ; • Cenvat Credit Taken; • Cenvat Credit Utilized; and • Particulars of Suppler of input or capital goods. Surender Gupta, FCA, DISA (ICA)

  21. Records and ReturnsCenvat Credit • For Input Services: - The provider of output service shall maintain proper records containing the following details; • Receipt of input services; • Consumption of input services; • Value of input services; • Tax Paid; • Cenvat Credit Taken; • Cenvat Credit Utilized; and • Particulars of provider of service Surender Gupta, FCA, DISA (ICA)

  22. Records and ReturnsCenvat Credit • Documents for availing Cenvat Credit Excise Duty / CVD • An invoice of the manufacturer • An invoice of the importer • An invoice of the First / Second Stage Dealer • A supplementary Invoice • A bill of entry • A certificate issued by an appraiser of customs in case of goods imported through post office Service Tax • Invoice / bill / challan of the service provider • Invoice / bill / challan of the input service distributor • Where the specified persons are liable to pay Service Tax on the basis of challan Surender Gupta, FCA, DISA (ICA)

  23. Records and ReturnsFAQs • Is there any time limit for issue of invoice / bill or challan • Whether single return is sufficient for more than one services? • Can service tax return be filed by post? • How to rectify an error in ST-3 submitted earlier? • What is e-filing of service tax return? • When no services are provided in the relevant half year, return is to be filed? • While availing Cenvat Credit original copy of document has been lost, what should be done? • What is the penalty for late filing of return? Surender Gupta, FCA, DISA (ICA)

  24. Thanks My e-book on Service Tax is: www.taxmanagementindia.com My e-mail: sarrca@rediffmail.com Surender Gupta, FCA, DISA (ICA)

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