Presentation on Service Tax By Service Tax 1

INTRODUCTION Introduced in 1994 Commenced with 3 Services with Rs. 410 Cr. Contributes over 56% of the GDP Service Tax now covers 106 services INTRODUCTION

Important Services Telephones Business Auxiliary Services Goods Transport Agency Construction services Erection, Commissioning and installation Banking & Financial Services Management, Maintenance and repair Man power supply Agency Authorized service Station

REVENUE SHARE Commissionerate Revenue for 2007-08 : Rs. 325 Cr.   Commissionerate Revenue for 2007-08 : Rs. 325 Cr. Revenue for the year 2008-09 upto 2/09: Rs. 268 Cr. Assessee base as on date:16659 All India Revenue : Rs. Crores Percentage : % of the revenue

SERVICE TAX LIABILITY Service Tax is required to be paid by the service providers under Section 68(1) of the Finance Act, 1994 when the receipt of gross amount exceeds Rs.10 lakhs per year. Service recipients are required to pay in certain circumstances in terms of Section 68 (2) of the Finance Act, 1994 read with Rule 2(1)(d) of the Service Tax Rules, 1994. For example, Import of services, Goods Transport Agency, sponsorship, Insurance Auxiliary Services etc.

PAYMENT OF SERVICE TAX Category Frequency Due date Individuals, Proprietary firm & Partnership firm Quarterly 5th of the following Month (6th for e-payments) Others (Companies, society, Trusts etc.) Monthly 5th of the Month following the Quarter (6th for e-payments) All Categories of the assessees are required to pay Service Tax for the month of March and for the Quarter ending March by 31st March itself (even if e-payment is made). Delayed payment will attract interest @ 13% per annum under Section 75 of the Finance Act, 1994.

RATE OF SERVICE TAX Period S.T Edn. Cess S & H Ed. cess 16.10.1998 – 13.5.2003 5% - 14.5.2003 – 9.9.2004 8% 10.9.2004 – 17.4.2006 10% 18.4.2006 - 10.5.2007 12% 2% 11.5.2007 - 23.2.2009 1% From 24.2.2009

REGISTRATION Registration is required to be done within 30 days from the date of commencement of the business or within 30 days from the introduction of levy on such service, whichever is later. Exemption from Registration, if the turnover is below Rs. 9 lakhs. Exemption not applicable when persons are required to pay service tax under Section 68 (2) of the Finance Act, 1994 read with Rule 2(1)(d) of the Service Tax Rules, 1994.

ADVANTAGES OF REGISTRATION The Central Excise duty paid on the inputs and capital goods and Service Tax paid on the input services can be availed as Cenvat Credit. Enhanced business opportunities as organized sector prefers to award service contracts only to the Registrants. Availability of Rebate/ Refund of Cenvat credit for Exports. The pride in the society as a registered Assessee and as a Taxpayer.

RECORDS There is no specific stipulation relating to the maintenance of records. Records maintained for other statutory purposes acceptable for Service Tax purposes. List of Records to be furnished to the jurisdictional Superintendent of Service tax at the time of filing of the ST-3 return for the first time. Records are to be preserved atleast for a period of 5 years. Records should be made available in the registered premised for examination by the Service tax Officers and Audit team.

RETURNS The assessees are required to file the statutory Return in Form ST-3, in triplicate as per Section 70 of the Act and Rule 7 of the Service tax Rules, 1994. Return is to be filed by 25th October for the Half year ending 30th September and by 25th April for the Half year ending 31st March. Late fee for delayed submission of returns under Rule 7C: Upto 15 days Rs. 500/- 15-30 days Rs. 1000/- Beyond 30 days Rs. 1000/-+ Rs.100/- per day beyond 30 days subject to a maximum of Rs. 2000/-

INVOICE There is no specific format prescribed for Invoices. The Invoice should, however, contain the following details: Sl. No. Name, address and Registration No. of the assessee. Name and address of the recipient of service. Description, Classification and value of taxable service. The amount of Service Tax payable.

GENERAL EXEMPTIONS Services to the United Nations or an International Organization - Notifn No. 16/2002 ST dated 2.8.2002. Services to a developer of SEZ or to a unit of SEZ (In the form of Refund) - Notifn No. 9/2009 ST dated 3.3.2009. Value of goods and materials sold to the recipient of service during the course of providing any taxable service - Notifn No. 12/2003 ST dated 20.6.2003. Service provided for official use of a foreign diplomatic mission or consular post in India a - Notifn No. 1/2001 ST dated 3.7.2001.

-Notifications 6/2005 ST dated 1.3.2005 as amended SMALL SCALE EXEMPTION -Notifications 6/2005 ST dated 1.3.2005 as amended Year Exemption limit For payment of Tax For Registration 2005-06 Rs. 4 lakhs Rs. 3 lakhs 2006-07 & 2007-08 Rs. 8 lakhs Rs. 7 lakhs 2008-09 & 2009-10 (as on date) Rs.10 lakhs Rs. 9 lakhs

Conditions for SSI exemption   Not admissible when Service Tax is required to be paid in terms of Section 68 (2) of the Finance Act, 1994 read with Rule 2(1) (d) of the Service Tax Rules, 1994 Benefit is optional. Not available when the brand name of others is used. Not available when the turnover in the preceding year is more than the stipulated threshold limit. Cenvat Credit facility not admissible during the period of exemption.  

ABATEMENTS from 10% to 70% Benefit is optional. Notifn No. 1/2006-ST dated 1.3.2006   Available for 11 services at varying rates ranging from 10% to 70% Benefit is optional. Subject to stipulated conditions.  

ABATEMENTS LIST OF SERVICES Tour operator Rent-a-cab Convention   Mandap keeper Tour operator Rent-a-cab Convention Business Auxiliary Services (select activities) Chit Funds Erection, commissioning & Installation Construction services Catering, Pandal or shamiana Transport of Goods by Road/ Rail 

CONDITIONS FOR ABATEMENT Cenvat credit cannot be availed. Benefit of Notification No. 12/2003-ST dated 20.6.2003 cannot be availed. Value of goods and materials supplied or provided or used by the service provider for providing the service to be included in the Taxable value. Not applicable for completion and finishing services provided exclusively.

EXPORT OF SERVICES Service should be provided from India and used/ consumed outside India. Payment for such service should be received in convertible Foreign exchange. Eligible for rebate of Taxes/duties paid on the taxable service and on the input services or inputs.

IMPORT OF SERVICES Governed by Section 66A of the Act and Taxation of Services (provided from outside India and received in India) Rules, 2006. The recipient of service would be treated as Service provider for the purpose of compliance of the statutory provisions. 

VALUATION Governed by Section 67 of the Finance Act, 1994 read with Service Tax (Determination of Value) Rules, 2006. If the consideration is received wholly in money, the value shall be the gross amount charged by the service provider. The term ‘consideration’ includes any amount payable for the services.

VALUATION Includes any amount received towards the service before, during and after provision of such service payment by cheque, credit card, deduction form account and any form of payment such as credit notes, debit notes, book adjustment etc. All expenditure or costs. The gross receipt would be treated as cum-tax value, if Service Tax amount is not separately charged.

VALUATION Value of consideration should be included- amount charged for similar service. value so determined cannot be less than the cost of provision of such service. The Department reserves the right to verify the records if the value is not convincing.

CENVAT CREDIT Cenvat Credit Rules, 2004 permits Cenvat credit on the Central Excise duty paid on the inputs for providing output services (except diesel and petrol); Central Excise duty paid on the Capital Goods (Credit of duty paid on the motor vehicles admissible for certain select categories of service providers); Service Tax paid on the input services for providing the output service.

CENVAT CREDIT Documents for availment of credit: Invoice issued by manufacturers/ Importers and their Depots; Invoice issued by the Registered dealer; Bill of Entry; Invoice issued by the service provider/ Input service distributor; Certificate of the Appraiser of Customs.

CENVAT CREDIT Salient features: Head office can distribute the credit to various branch offices; Invoice for availment of the credit should contain the relevant information as prescribed for issue of invoices; Credit of inputs or input services used in the output service exported would be granted as Refund, subject to certain conditions.

CENVAT CREDIT Conditions: Credit is not permissible if used exclusively for providing the output services; When both the exempted services and taxable services are provided, proportionate credit would be allowed based on the separate accounts to be maintained; If separate accounts cannot be maintained, utilization of credit would be limited to 20% of the Tax liability.

PENAL PROVISIONS Contravention Penalty Section Failure or Delay in obtaining Registration as per Section 69 of the Act read with Rule 4 Upto Rs. 5000/- Sec.77 Failure or delay in Payment of Service Tax as per Section 68 of the Act read with Rule 6 Rs. 200/- per day or @ 2% per month whichever is higher subject to a maximum of tax amount Sec. 76 Non payment of Service Tax on account of fraud, collusion etc. 100% to 200% of the Tax Sec. 78 Contravention of the provisions of the law Upto Rs.5000/-

E-GOVERNANCE The Department is keen to encourage and provide all facilities for e-filing of the returns and e-payment for hassle free transactions; ACES Scheme launched by the Commissionerate provides immense facilities for the Trade; The Coimbatore Commissionerate is dedicated to the mission of achieving 100% e-governance for providing Taxpayer friendly facilities with enhanced efficiency.

Coimbatore Commissionerate Presented by: Service Tax Research & Intelligence Wing Coimbatore Commissionerate

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