Service Tax Voluntary Compliance Encouragement Scheme(VCES)– broaden the tax base – Are honest tax payers put at a disadvantage?

Statistics  Losses over Rs 9,872 crore - April- December,  Recovery Over Rs 1,969 crore realised from 4,133 defaulters.  Extensive publicity about the pending service tax liability  Service Tax collection - Rs crore against expected crore for  Proposed Service Tax Collection for the current fiscal Rs180141crore

Extract of Budget Speech  Registered Assesses17 Lakh  Return Filers 7Lakh  The FM Proposed VCES to Collect A Reasonable sum of Money From The Defaulters.  Immunity from Interest, Penalty & Prosecution

Constitutional Validity  The presidential assent was received on 10 th May Thereafter  The CBEC, vide notification no. 10/2013 – ST dated 13 May 2013, notified the Service Tax Voluntary Compliance Encouragement Rules, 2013  The VCE Scheme was brought into effect upon enactment of the Finance Bill, 2013.

What is VCES? An Amnesty Scheme  To Broaden the Tax Base  To give incentive to defaulting persons to voluntarily Pay tax dues  To know the Probable Defaulters  Period Involved 1/10/2007 to 31/12/2012

Few Salient Features Of VCES  For Tax Dues from January 2013 onwards-Benefits Of VCES Cannot Be Availed  If Declared once- Payment Is Must as Per Proposed Section 100 of The Finance Act, 2013  No Refunds

How and when the liabilities have to be paid?

What are the Immunities Available?  Waiver Of Interest  Waiver Of Penalty  Free From Any Prosecution

Reason behind the Amnesty Golden Chance  For those who wants to Make Good their Wrong Done  For 10 lakh Probable Defaulters  To Introduce a Tax Generation Instrument  Large scale non-compliance

Who Is Eligible to get Immune?  Stop-filers of returns;  Non-filers of returns;  Non-registrants;  Service providers who have not disclosed true liability in the returns filed during the period of scheme Who Is Not Eligible?  Assessees disclosing true liability in service tax returns  Assessees in receipt of Show Cause Notice / Order of Determination u/s 72, 73 or 73A of Finance Act, 1994  Assessees being audited under the provisions of Finance Act, 1994 and such audit is pending as on 1 March 2013  Assessees against whom inquiry / investigation has been initiated and is pending as on 1 March 2013:

Procedure For Availing Amnesty  Submit Declaration in Form VCES-1 with Designated Authority  a Half Yearly Calculation Sheet is also to be submitted  a separate calculation sheet for each category of service.  The calculation sheets are to be in the format of the service tax return  After submission of form VCES – 1, the Designated Authority shall issue an acknowledgement in form VCES – 2 within seven working days.  The acknowledgement does not certify the correctness of the declaration furnished by the assesse.  proof of payment periodically along with copy of acknowledgement (Form VCES – 2) is also to be furnished  Upon furnishing of the same in full, the Designated Authority will issue an Acknowledgement of Discharge in form VCES – 3 within seven working days  To make a Declaration, First You needs to Get registered with the dpartment.

Inherent Flaws  Undertaking given by Mr. P.Chidambaram To The Hon’ble Supreme court  Cumbersome Procedure of availing the befits of the Scheme.  Unawareness among the semi urban & rural areas about Service Tax Laws.

Broadening of Country’s Tax Base  The Amnesty Scheme is a welcome move by the Finance Ministry to increase the tax base and, thereby, increasing service tax collections.  The expected collection from the scheme is Rs Crore

Conclusion YES NO Are Honest Tax Payers at A Disadvantage?

Bibliography Websites of Various Reputed CA Firms Various Blogs Authenticate Blogs I would Like to add Few Names Who helped me in making This Presentation: CA Yogita Anand Ma’am CA Pankaj Jain Isha Chitkara & Tanvi Jain

Elocutionist: Govind Rai Garg Reg. No. : NRO