Service tax is an indirect tax levied by Central government of India on services provided by an individual or firm to the general public. It is collected from every individual whether he is a service provider or a service receiver. Levying of service tax follows a chained process in which the government imposes tax on service providers for rendering their obligations while the service providers further recovers their tax loss indirectly from their customers by adding it to their later cost. Under statutory definitions service tax has no separate law to define, so government to ensure better implementation of service tax rules has added it to the Finance Act 1994 (amended 2013).
Key Features of Indian Service Tax Rules:
- From July 2012, Service tax can only be levied on taxable services defined under Finance Act whereas all other services included in “Negative list of services” or having any priority in exemption are exempted from any tax payment.
- For taxing of services, proper definition of each individual service can be obtained from Sect. 65B (44) & Sect. 66E of the Finance Act.
- All Services as defined in the act would be chargeable under a specified rate of 14% adding a .5% Swacch Bharat Cess and .5% of Krishi Kalyan Cess, which shall subject to change timely by government approval.
- For every assessee having taxable incomes up to Rs10lakh in a financial year, an exemption to payment of full service tax has been given.
- For avoiding double payment of taxes separate tax rules have been defined under
CENVAT Credit Rules, 2004 to set off effective input taxes on input services and capital goods.
How to File Service Tax?
Reducing up the paper work government has initiated a speedy process of service tax filing through their online portal “ www.aces.gov.in “.
Step 1: Applying for registration: For filing up service tax return a user first have to register for an account at the aces portal by clicking on register button on ww.aces.gov.in by which he receives a username and a password to log in.
Step 2: Submitting online form: After registration, a digital form “ST-3” is to be filled with all the required details of tax payable, cost of services rendered and other necessary proofs after getting them authenticated by digital signatures of a professional CA/CS.
Service tax is filed twice a year i.e a user need to submit the ST-3 form half yearly being 25 th of October the first half and to 25 th April for 1 st October to 31st March being 2 nd half.
On successful submission user will get an acknowledgement number which will be used for any future discrepancy or modification required in submitted return.
Step 3: Revising : With submission of all the required details and documents , the user then have to confirm the information submitted and revise the return for modifications within 90 days of submission.
On successful acceptance of the return user would be notified with a mail confirmation highlighting the status as “Filed” completing the online submission process.