All About Service Tax Act

The tax paid by the service provider for the services is called Service Tax. The tax is paid by the service provider to the Government of India. The Service Tax Act is the Chapter V of the Finance Act, 1994. Any individual service providers have the option of paying tax through cash while a company can pay it on accrual basis. The due dates for payment of Service taxes are 25th October and 25th April. The Finance Act 1994 creates some set of rules in order to collect and assess the service tax in India. The Service Tax Act came into effect from 01st July, 1994.

Paying Service tax in India

There is a Challan available in some of the specified bank’s branches in which you can pay your service tax. Service tax can be paid by using the G.A.R-7. This G.A.R-7 is a matter of form for Service Tax payments. The form is to be filled with the required information and is to be submitted in the specified bank. Now the Central Board of Excise and Custom has introduced e-payments. This e-payment facility helps you to pay your service tax online. Now only individual service providers are required to pay in cash while other companies can pay through online e-payment systems. The payment of the tax is to be made as soon as the service is rendered to the customer.

Penalties for Non-payment of Service Tax

According to the sections 76,77 and 78 of the Finance Act,1994 the Government can charge penalty for non-payment of service tax and meet some conditions which are mentioned below:

  • When a person fails to provide information before the Central Excise and Custom Officer he will be liable to pay Rs.5000 or Rs.200 a day after due date whatever is higher.
  • Penalty is to be paid for delayed payment of Service Tax.
  • Providing willful miss-statements of the service provided for saving their tax attracts penalty.
  • Failure of tax payment electronically may be penalized to the extent of Rs.5000.
  • Failing to present Service Tax Return within due date will be charged Rs.2000.

Exemptions under Service Tax Act

Service tax is to be paid on all the service provided except the services which are included in the negative list. Even the Central and State government service providers need to pay service tax for their service rendered. Some major exemptions are given below:

  • If the total turnover of any small scale or individual service provider is below Rs.10, 00,000 they are exempted from Service Tax payment.
  • A service towards United Nations and International association is not taxable.
  • Services provided to diplomatic missions and their family members are not liable to pay tax.
  • Services to Special Economic Zone Service tax are not applicable.
  • The receivers of the service are not liable to pay Service Tax.

The Service Tax Challan rates have increased in India after the announcement by the Finance Minister. The rate has increased by 1.64% to 14%. The government of India has taken the move to levy a Swachh Bharat Cess of 2%.

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