Service Tax Payment Procedure in India

by Vikash Dhanania Consultant

No one look forward to paying taxes, but this is something that we have to do regardless of what a big inconvenience it might be. Indian tax laws are complex and amendments are made every now and then. That is why you need to keep yourself updated with the tax laws and tax filing procedures. Even a slight mistake in paperwork can land you in major legal trouble. That is why you need to be fully informed when filing service tax.

Service tax:

We all are familiar with the term service tax, but many don’t know what it actually refers to. To put it simply, service tax is a type of tax that is levied on various services. Just as Excise duty needs to be paid on manufactured goods, service tax needs to be paid on services we require. The service provider is responsible for paying the amount of taxes to the government. However, he/she will collect the amount from the recipient of services, and pay the amount to the government.

Levy of service tax:

As of May 1st, 2006, a total of 95 services have been included in the list of taxable services in India. If you check out the section 64 of the 1994 Finance Act, you would see that the levy of service tax has been extended to include the whole of India except for the state of Jammu and Kashmir. The general liability of paying the amount of taxes has been placed on the individual who provides the taxable service.

12% of the “gross amount” needs to be paid as service tax. In specific cases, however, deductions are allowed and it is detailed in the section 67 of the Finance Act. The service provider can charge this amount for providing the service. The current rate of Education Cess is 2% on the total amount of service tax. The liability of paying service tax has been placed on the recipients or receiver of the taxes.

For example, if the value of the taxable service is 100, 12% of service tax would be charged. So this makes an added Rs. 12. Also Education Cess is 2% of the service tax, which amounts to Rs.0.24.

Registration:

After you learn about what service tax is all about and how much service tax is charged, the logical question would be how to pay service tax. That is when you need to learn about the registration process. If you provide a taxable service, you would need to be registered with the Central Excise Office of your jurisdiction. As a registered service provider, you would be known as an ‘assessee’ (section 69 of 1994 Finance Act). The Central Excise Department is responsible for administering the service tax. To find more details, you may refer to the various government websites.

If you are having a hard time taking care of your tax problems all by yourself, you must get in touch with companies that provide help with service tax related issues. They have team of professionals who will help you with A-Z of service tax filing.

Author Resource:
The author of this article is a highly qualified and sought-after tax consultant to individuals and small entrepreneurs. Among other important factors, the author stresses on the importance of service tax compliances so as to stay in the good books of the authorities. To know more about How to Pay Service Tax in India, he recommends you to visit myservicetax.in