Hey friends a very good evening to all the members of cci family. Today i have planned to start a new series on " SERVICE TAX ".
After completion of my first series on " VAT a Better Understanding ", I thought to start a new one and i am 100% sure that it will be proved benefitial for both IPCC/ as well as FINAL students. So dont ignore it -
I will start from the very begining of service tax and my series will cover all the necessary things in service tax.
See friends i am doing it just for all of you, so please take it seriously. So lets start the journey my friends - " SHRI SATGURU DEVAI NAMAH " ( SSDN )
1. Introduction -
Service tax is a tax on service provided by one person to another. Basically one who provides the service is called " service provider " and one who receives is called " service receipient ". As for every tax there has been an act defined but for service tax No service tax act has been defined, so all the provisions are contained in " Finance Act 1994 ".
Basically service tax is being paid by service provider and paid to the government. But in some special cases it is will be paid by service receipient and these rules are defined in " Reverse charge mechanisom ". And the cases are as follows -
(a) Good transport agency - service tax will be paid by the person who will pay the freight.
(b) Sponsorship services - Service tax will be paid by receiever of service.
(c) If any person has provided service from outside the country to a person in india.
Input service Distributor -
If a manufactures who deals in sale of goods or in providing service who has many units in the state can pass on the credit to his other units with the help of tax invoices recieved. such person is called ISD.
As per definition given in the Rule 2(m) of the CENVAT Credit Rule 2004, Input Service Distributor means the office of the manufacturer/producer or of output service provider who receives the invoices for purchase of services from the output service provider under Rule 4A of the Service Tax Rules 1994.
MANNER OF DISTRIBUTION
As per Rule 7 of the CENVAT Credit Rules 2004, the input service distributor can not distribute CENVAT Credit of Service Tax in excess of the amount paid, to its unit engaged in manufacturing/providing output service and secondly the credit of Service tax can not be distributed attributable to the unit exclusively engaged to manufacturing exempted goods or providing exempted output services.
Registration under Service Tax -
Every provider of a service whose turnover in a year has exceeded8 lakh has to apply to the department within 30 days of crossing the limit for registration in form " ST- 1 ".
Even a ISD has to apply for registration under finance act 1994.
The department in return will issue the registration certificate in form ST- 2 within 7 days of receipt of application. If the department does not issue registration certificate in the prescribed period, the person will be declared to be registered.
Payment of sevice tax - ( Rule 6 )
(a) Every service provider other than Individual and partnership firm has to deposit service tax on monthly basis and the individual & partnership firm on Quaterly basis.
(b) As per Notification No 43/ 2011 E - Filing of service tax has been made compulsory from 1 october 2011. So it means that Due date for payment of service tax will be 6 th of the following month or quarter as the case may be and 31 st march for the year end.
Due date for payment of service tax -
Monthly / Quarterly - 6 th of follwing month or quarter as the case may be.
For last month or Quarter - 31 March.
So thats bring us to the end of part 1.
Hope that all will appreciate mt effort and will find it useful.
Thanks & Regards
Sanyam Arora
CAclubindia
