Service Tax_Shivpreet Singh Sandhu

8/9/2019 Service Tax_Shivpreet Singh Sandhu

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Presented ByShivpreet Singh SandhuInfrastructure Management


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TAX

A fee charged ("levied") by a government ona product, corporate it is a direct tax. If tax is levied onthe price of a good or service, then it is called anindirect tax. The purpose of taxation is to finance

government expenditure. One of the most importantuses of taxes is to finance public goods and services,such as street lighting and street cleaning. Since publicgoods and services do not allow a non-payer to beexcluded, or allow exclusion by a consumer, therecannot be a market in the good or service, and so theyneed to be provided by the government or a quasi-government agency which tend to finance themselveslargely through taxes.
http://www.businessdictionary.com/definition/direct-tax.htmlhttp://www.businessdictionary.com/definition/indirect-tax.htmlhttp://www.businessdictionary.com/definition/indirect-tax.htmlhttp://www.businessdictionary.com/definition/direct-tax.html


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Classification

Direct Tax

Capital gain tax

Personal income tax

Corporate income tax

Property Tax

Indirect tax

Excise tax

Stamp duty tax

Service tax

Expenditure tax


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INTRODUCTION

Services constitute a very heterogeneous spectrum ofeconomic activities. It occupies the centre stage of theeconomy.

The share of the service sector in the real GDP rose from28% (1950) to 41%(2001) and presently contributing56% which is more than half of the total GDP

Thus tremendous growth of the service sector led govt.

to levy tax on services

And hence it made a humble beginning on July1, 1994


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Service tax is the tax on service. Service meansvalue addition to a product that is intangible

It was imposed by amending chapter V of FinanceAct, 1994

Was commenced with 3 organized services of

telecom, general insurance and stock broking andpresently taxing 106 services


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MAIN FEATURES

Indirect Tax : Source of revenue for govt. in form ofindirect tax

No Separate : No separate act only central govt. haspower to Act make rules

CBEC : It is administered by Central Board of

Excise and customs Uniform rate : Current 10.3% [ 2%(EC) + 1% (SHEC) ]

No Double : Service under two or more subclausescannot taxation be taxed twice if provided onlyonce

Non : Extended to whole India except for stateJ&K

Applicability


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Small Service : Threshold limit of up to 10 lakh by service

excluded provider fully exempted from tax Payable by : Service provider is liable to pay service tax

Service provider except the situation under 2(1)(d) whereperson receiving the service is liable to pay Service tax

Self Assessment :Provisions made for self assessment, rectification,revision, appeals, penalties, as well as forregistration of persons liable to pay

Exemption by : Power to central govt. to grant exemption under

notification appropriate cases, by means of notification


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VALUATION

Governed by Section 67 of the Finance Act, 1994 readwith Service Tax (Determination of Value) Rules, 2006.

If the consideration is received wholly in money, thevalue shall be the gross amount charged by theservice provider.

The term consideration includes any amount payablefor the services.


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Includes

any amount received towards the service before,during and after provision of such service

payment by cheque, credit card, deduction formaccount and any form of payment such as creditnotes, debit notes, book adjustment etc.

All expenditure or costs.

The gross receipt would be treated as cum-taxvalue, if Service Tax amount is not separatelycharged


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VALUE OF TAXABLE SERVICE

= Gross amount 100

100 + Rate of service tax

SERVICE TAX

= Gross amount charged Rate of tax

100 + Rate of tax


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Category of person mandatoryto obtain Registration

Every Person liable : Every person providing taxable service

to pay service tax is himself liable to pay the service tax sec 68(1)

Input Service : An office of the manufacturer or the provider of

Distributor the output service who receives invoice for the

procurement for input services and issues invoicefor the purpose of distributing the credit of servicetax paid to such manufacturer and provider of

output service is an Input Service Distributor

Any provider of taxable service whose aggregate value for FY exceeds 9lakh


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RECORDS

There is no specific stipulation relating to the maintenance ofrecords. Records maintained for other statutory purposesacceptable 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-3return for the first time.

Records are to be preserved atleast for a period of 5 years.

Records should be made available in the registered premisedfor examination by the Service tax Officers and Audit team.


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RETURNS

The assessees are required to file the statutoryReturn in Form ST-3, in triplicate as per Section70 of the Act and Rule 7 of the Service tax Rules,1994.

Return is to be filed by 25th October for the Halfyear ending 30th September and by 25th April forthe Half year ending 31st March.

Late fee for delayed submission of returns underRule 7C:Up to 15 days Rs. 500/-

15-30 days Rs. 1000/-

Beyond 30 days Rs. 1000/-+ Rs.100/- per daybeyond 30 days subject to amaximum of Rs. 2000/-


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Months Due DateIf depositedelectronically

Due DateOther cases

July 6 August 5 August

August 6 September 5 September

September 6 October 5 OctoberOctober 6 November 5 November

November 6 December 5 December

December 6 January 5 January

January 6 Feburary 5 Feburary

Feburary 6 March 5 March

March 31 March 31 March


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General Exemptions

1. Services provided to United Nations or an Internationalorganization

Central government exempts all taxable services under sec(65)from payment of whole of service tax

2. Services provided to developer or units of SEZ

Full exemption to service provider who provided taxable servicesto the developer of SEZ or SEZ for consumption of services withinSEZ

3. Goods and material sold by service provider to reciptent ofservice

It exempts all taxable services from service tax , which are equalto value of goods and material sold by service provider to therecipient of the services (documentary proof required)

4. Exemption from small service providers

Turnover less than 10 lakh are exempted


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Exemptions Cont.5. Services provided by Reserve bank of India

Exemption from service tax on all taxable services provided by RBI

6. Exemption to Technology Business Incubator (TBI), Science andtechnology Entrepreneurship Park (STEP)

All taxable services provided or to be provided after April 1,2007 by TBIor STEP recognized by National science and Technology EntrepreneurshipBoard subject to information in prescribed format 1 and 2 in notification

7. Services provided by digital cinema service providers

Exemption to taxable services provided or to be provided in relation todelivery of content of cinema in digital form after encryption , electronically

8. Services provided by the Resident welfare association

Exemption to services provided by Resident welfare association to itsmembers when montly contribution does not exceed Rs 3000

9. Technical testing and analysis services

Exemption granted to testing of newly developed drugs by clinical

research organization

SERVICE TAX NOTIFICATIONS


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SERVICE TAX NOTIFICATIONS-SIGNIFICANT CHANGES-BUDGET-

2010-11 Air Travel All air travel to be come under service tax irrespective of the

class of travel and the destination, however effective date to benotified by govt.

Service tax on the tax by the govt.(including foreign govt.) onpassenger traveling by air is exempted w.e.f 27.02.10

Transfer of goods

Transfer of goods by rail (except some essential goods) issubject to service tax w.e.f 01.04.2010

Presently transfer of fruits, vegetables, eggs or milk by road

by a goods transport agency is exempted . The scope ofexemption is being expanded by including food grains andpulses in the list of exempted goods from service tax w.e.f27.02.2010


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Changes Cont.

Electricity Transmission

Electricity transmission is completely exempted from servicetax w.e.f 27.02.2010

Exemption from service tax is being provided to servicesrelating to Erection, Commissioning or Installation of,-

(a) Mechanized Food Grain Handling Systems etc.;

(b )Equipment for setting up or substantial expansion of coldstorage; and

(c )Machinery/equipment for initial setting up or substantialexpansion of units for processing of agricultural, apiary,horticultural, dairy, poultry, aquatic, marine or meat products.


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Changes Cont.

Software

Packed or canned software fully exempted fromservice tax w.e.f 27.02.2010 provided for singleuse and duty of excise and custom has been paid

No Penalty

Service tax paid with interest prior to theissuance of show case notice will subject to nopenalty


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NEW SERVICES UNDERSERVICE TAX

1. Services of promoting, marketing or organizing of games ofchance, including lottery

2. Health services, namely(a) health check up undertaken by hospitals or medicalestablishments for the employees of business entities; and(b) health services provided under health insuranceschemes offered by Insurance companies

3. Services provided for maintenance of medical records ofemployees of a business entity

4. Services of promoting of a 'brand' of goods, services,events, business entity etc.


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Cont.5. Services of permitting commercial use or exploitation of any

event organized by a person or organization

6. Services provided by Electricity Exchanges

7. Services related to two types of copyrights hitherto notcovered under existing taxable service Intellectual PropertyRight (IPR), namely, those on (a) cinematographic films; and(b) sound recording

8. Special services provided by a builder etc. to the

prospective buyers such as providing preferential location orexternal or internal development of complexes on extra

charges. However, service of providing vehicle-parkingspace would not be subjected to tax.


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Thank You

Documents

Service Tax_Shivpreet Singh Sandhu