Reduction in limit for mandatory e-payment of service tax

CA Vikas Garg (Own Business) (453 Points)

28 November 2013

Dear All,

There is latest notification dated 22nd of Nov 2013 Notification No 16 /2013-Service Tax, have been issued by Govt to notify these changes.

That, from 1st of January, 2014, a Service Tax payer who has paid a tax of more than rupees one lakh in the previous financial year shall be required to pay tax through internet banking.

Step has been taken as measure of trade facilitation and it is expected that increased coverage of e-payment would make it convenient for the trade to pay taxes electronically.

Presently, A Service provider is required to pay Service Tax through internet banking (i.e. e-payment) if the total tax paid by the Service provider exceeds rupees ten lakhs in the previous financial year as per rule 6 of the Service Tax Rules, 1994.

Penalty for non payment of electronic payment of Service tax

Non-Payment of tax through elctronic made attracts penalty which may be extend upto Rs.10,000 under section 77(1)(d) w.e.f 08.04.11 (earlier it was Rs.5,000).

Points to be noted for Calculation of Threshold Limit.

Both CENVAT Credit as well as amount paid by challan is required to be summed up for threshold limit.

For eg. A person is required to make e-payment if he has claimed Rs 80,000/- as Cenvat credit and paid Rs 40,000 as Service tax by challan in FY 2012-13, w.e.f 01.01.14 as total tax paid for previous financial year i.e F.Y. 2012-13 (cenvat credit taken plus challan amount paid = 80000+40000 =Rs 1,200,00/-) is more than one lakh .