Tax deducted at source

SERVICE TAX

APPLICABILITY:

Aggregate value of Taxable Services provided		Service Tax applicable
Preceding Financial Year	Current Financial year	Service Tax applicable
Less than 10 lakh	Less than 10 lakh	No service tax
Less than 10 lakh	More than 10 lakh	Service tax applicable after 10 lakh
More than 10 lakh	Less than 10 lakh	service tax applicable from Rs one ,No E xemption available

POINT OF TAXATION :

S. No.	Date of completion of service	Date of invoice	Date on which payment received	Point of taxation	Remarks
1	April 10, 2012	April 25, 2012	May 10, 2012	April 25, 2012	Invoice issued in 30 days and before receipt of payment
2	April 10, 2012	May 15, 2012	May 20, 2012	April 10, 2012	Invoice not issued within 30 days and payment received after completion of service
3	April 10, 2012	April 25, 2012	April 20, 2012	April 20, 2012	Invoice issued in 30 days but payment received before invoice
4	April 10, 2012	May 15, 2012	April 5, 2012 (part) and April 25, 2012 (remaining)	April 5, 2012 and April 10, 2012 for respective amounts	Invoice not issued in 30 Days. Part payment before completion, remaining later

Note: w.e.f 1st April, 2012, the time period for issuance of an invoice specified in Rule 4A of the Service Tax Rules,1994 has been increased from 14 days to 30 days from the date of completion of service or receipt of any payment towards the value of such taxable service, whichever is earlier.
In case service provider is banking company or a financial institution including NBFC, the time period has to be read as 45 days.

SERVICE TAX RETURN DUE DATE:

APRIL TO SEPTEMBER	25-Oct
OCTOBER TO MARCH	25-Apr

SERVICE TAX PAYMENT DUE DATE:

Category	Frequency	Due Dates
In case of Individuals, proprietary Firms & Partnership Firms	Quarterly as mentioned below -	(6^th for internet payment)
	( i ) For Q.E. 30th June	- by 5th July
	(ii ) For Q.E. 30th Sept.	- by 5th Oct
	( iii ) For Q.E. 31St Dec.	- by 5th Jan.
	( iv ) For Q.E. 31st March	- by 31st March
Others (e.g. Companies, Societies, Trusts etc.)	Monthly	By 5th of the month immediately following the month .However, in case of March, the payment should be made by 31st March.

PENALTY / INTEREST:

Period of Delay	Penalty/late fee After finance bill 2011
for delay up to 15 days	INR 500
for delay beyond 15 days but up to 30 days	INR 1,000
for delay beyond 30 days	INR 1,000 + INR 100 per day (from 31st day subject to a maximum amount of Rs 20000.
The rate of interest of 18% will be applicable from 1st April, 2011. However interest rate is reduced by 3 % for turnover up to 60Lacs

ABATEMENT RATES:

Sr No.	Description of taxable service	% Abatement	% taxable	Conditions
1	Services in relation to financial leasing including hire purchase	90	10	Nil.
2	Transport of goods by rail	70	30	Nil.
3	Transport of passengers, with or without accompanied belongings by rail	70	30	Nil.
4	Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal,shamiana or any other place, specially arranged for organizing a function) together with renting of such premises	30	70	(i) CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
5	Transport of passengers by air, with or without accompanied belongings in 1. economy class	60	40	CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
5	2. other than economy class	40	60
6	Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes.	40	60	Same as above.
7	Services of goods transport agency in relation to transportation of goods.	70	30	CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
8	Services provided in relation to chit	30	70	Same as above.
9	Renting of any motor vehicle designed to carry passengers	60	40	Same as above.
10	Transport of goods in a vessel	70	30	Same as above.
11	Services by a tour operator in relation to,- (i) a package tour	75	25	(i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
		75	25	(ii) The bill issued for this purpose indicates that it is inclusive of charges for such a tour.
	(ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour	90	10	(i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
				(ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation.
				(iii) This exemption shall not apply in such cases where the invoice, bill or challanissued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.
	(iii) any services other than specified at (i) and (ii) above.	60	40	(i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
		60	40	(ii)The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour.
12	Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority	75	25	(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.
		75	25	(ii)The value of land is included in the amount charged from the service receiver.
	a. Residential properties having a carpet area above 2000 sq ft and where amount charged is equal to or more than Rs. 1 crore, b. Commercial properties.	70	30	same two conditions above
		70	30	(Notification No. 02/2013-ST dated 1st March, 2013 applicable wef 01.03.13)

Abatement and exempted services is not to be counted for calculation of 10 Lakh:
Various services has been exempted from service tax vide notification 25/2012. If service provider is providing both exempted and taxable services than turnover of exempted services is not be added for calculation of 10 lakh .

Similarly abatement from gross amount charged by service provider has been defined in notification 26/2012 .To calculate 10 lakh part only taxable part after abatement is to be considered.

Example: Person is providing services of renting motor vehicle designed to carry passengers. In a given financial year he has charged gross Rs 20 lakh for services. In notification 26/2012 only 40% part i.e 8 Lakh is taxable for renting of motor vehicle designed to carry passengers (40% of 20 Lakh) . So he can can avail 10 lakh exemption available to small service provider, as taxable part of services provided by him is less than 10 lakh Limit.

REVERSE CHARGE ON SERVICE TAX:

Under this scheme, service tax is payable by service recipient instead of service provider. Under this charge service receiver has to register himself under service tax. Further service receiver cannot claim general exemption limit of 10 Lakh Rupees. So he has to pay even on few rupees of service received.

(applicable from 1^st July, 2012)

POINT OF TAXATION IN REVERSE CHARGE:

In reverse charge point of taxation is when the payment is made i.e. service tax liability arises when service recipient make the payment to service provider.

Existing Rule:-

As per Rule 7, where the service tax is payable by the recipient of service like GTA service, POT would be the date of payment of value of service, if made within 3 months from the date of invoice. In case, value of service is not paid within prescribed 3 months period, service tax would become payable as per rule 3 of POT rule.

Illustration:- Mr. X provided services to Mr. Y under RCM. The date of invoice is 01.01.2013.

Situation 1: Mr. Y made payment to Mr. X on 01.04.2013 –Since the payment is made within 3 months from the date of invoice i.e. payment made before 01.07.2013. Therefore, the liability to pay service tax on part of Mr. Y will arise from the date of payment to Mr. X .i.e. from 01.04.2013. Mr. Y is liable to pay service tax by 06.05.2013 (if he pays electronically another wise 05.05.201 3 is the due date)

Situation 2: Mr. Y made payment to Mr. X on 01.08.2013 –Since the payment is NOT made within 3 months from the date of invoice i.e. before 01.07.2013. Therefore, the liability to pay service tax will arise from 01.01.201 3. Mr. Y will now be liable to pay interest @ 30% along with service tax to the department.

New Rule of Point of Taxation in RCM (wef 01.10.2014):-

Union Budget 2014-15 has amended the first proviso of Rule 7 to provide that point of taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier. Find more..

NOTE:

Service Receiver cannot use the CENVAT credit to dispose off his liability. He is required to pay the service tax amount in cash only.

List of Services under RCM:

S.No.	Description of Services	Provided By	Provided To	% of ST payable by Provider	% of ST payable by Receiver
1	Insurance Auxiliary Service	Insurance Agent	Person carrying on Insurance business	NIL	100%
2	Sponsorship Service	By any service provider	Body Corporate or Partnership firm	NIL	100%
3	Transport of goods by Road	Good Transport Agency	Consignor or consignee in organized sector	NIL	100%
4	Legal Service	Arbitral Tribunal	Business Entity	NIL	100%
5	Legal Service	Individual advocate or firm of advocates	Business Entity	NIL	100%
6	Support Service by Government or local authority	Government or Local Authority	Business Entity	NIL	100%
7	Any Service	Person in Non Taxable territory	Person in Taxable Territory	NIL	100%
8	Any Taxable Service	Director of the company	Company or Body corporate	NIL	100%
9	Renting or hiring of motor vehicle to carry passenger on abated value. (60% abatement)	Individual, HUF, Firm, AOP, BOI	Business Entity registered as body corporate	NIL	100% (i.e. 40% of liability)
10	Renting or hiring of motor vehicle to carry passenger on non abated value	Individual, HUF, Firm, AOP, BOI	Business Entity registered as body corporate	50% ( wef 01.10.2014)	50% ( wef 01.10.2014)
11	Supply of Manpower	Individual, HUF, Firm, AOP, BOI	Business Entity registered as body corporate	NIL	100% ( wef 01.04.2015)
12	Security Service	Individual, HUF, Firm, AOP, BOI	Business Entity registered as body corporate	NIL	100% ( wef 01.04.2015)
13	Work Contract Service	Individual, HUF, Firm, AOP, BOI	Business Entity registered as body corporate	50%	50%

Download the pdf file for changes in RCM rates from 01/06/2015

accounting treatment of rcm:

Example:

Service Name: Supply of Manpower

Value of services provided by service provider (P) of Rs.10000/- to Recipient (R)

Service Tax Rate 12%, EC 2%, SHEC 1%

Service tax payable by P = 25%

Service tax payable by R = 75%

Accounting Entries in books of Recipient (R):

1. At the time of payment to the service provider:

Expenses A/c	Dr.	10000
ST Input Credit	Dr.	300
ST Input Credit EC	Dr.	6
ST Input Credit SHEC	Dr.	3
ST Input Credit Recoverable	Dr.	900
ST Input Credit Recoverable EC	Dr.	18
ST Input Credit Recoverable SHEC	Dr.	9
Bank A/c	Cr.		10309
ST Payable	Cr.		900
ST Payable EC	Cr.		18
ST Payable SHEC	Cr.		9
TOTAL		11236	11236

2. At the time of payment of service tax to Govt:

A) At the time of Payment:
ST Payable	Dr.	900
ST Payable EC	Dr.	18
ST Payable SHEC	Dr.	9
Bank A/c	Cr.		927
TOTAL		927	927

B) Service tax eligible Cenvat:
ST Input Credit	Dr.	900
ST Input Credit EC	Dr.	18
ST Input Credit SHEC	Dr.	9
ST Input Credit Recoverable	Cr.		900
ST Input Credit Recoverable EC	Cr.		18
ST Input Credit Recoverable SHEC	Cr.		9
TOTAL		927	927

NEGATIVE LIST OF SERVICE TAX:

Negative List of services is give below. There after list of exempted services are also provided.

A) Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;

(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) transport of goods or passengers;

(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities.

B) Services by the Reserve bank of India.

C) Services by a foreign diplomatic mission located in India

D) Services relating to agriculture or agricultural produce by way of –

(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or ~~seed~~ (The negative list entry in sub-clause (i) of clause (d) of section 66D is being modified by deleting the word “seed”. This will allow the benefit to all other testings in relation to “agriculture” or “agricultural produce: Budget 2013) testing;

(ii) supply of farm labour;

(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;

(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

(v) loading, unloading, packing, storage or warehousing of agricultural produce;

(vi) agricultural extension services;

(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

E) Trading of goods.

F) Any process amounting to manufacture or production of goods.

“process amounting to manufacture or production” in section 65B(40) is being expanded to include processes under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955.(Budget 2013)

G) Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.

H) Service by way of access to a road or a bridge on payment of toll charges.

I) Betting, gambling or lottery.

J) Admission to entertainment events or access to amusement facilities.

K) Transmission or distribution of electricity by an electricity transmission or distribution utility.

L) Services by way of –

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognized by law;

(iii) education as a part of an approved vocational education course.

M) Services by way of renting of residential dwelling for use as residence.

N) Services by way of –

(i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;

(ii) inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;

O) Service of transportation of passengers, with or without accompanied belongings, by –

(i) a stage carriage;

(ii) railways in a class other than –

(A) first class;

(B) an air conditioned coach;

(iii) metro, monorail or tramway;

(iv) inland waterways;

(v) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and

(vi) metered cabs, radio taxis or auto rickshaws;

P) Services by way of transportation of goods –

(i) by road except the services of –

(A) a goods transportation agency;

(B) a courier agency;

(ii) by inland waterways;

(iii) by an aircraft or a vessel from a place outside India up to the customs station of clearance in India;

Q) Funeral, burial, crematorium or mortuary services including transportation of the deceased.

Notes:-

> E-payment of service tax made mandatory for all assessees from the 1st October 2014.

> The Point of Taxation for reverse charge will be the payment date or the first day that occurs immediately after a

period of 3 months from the date of invoice, whichever is earlier.

> Rate of interest increased upto 30 percent w.e.f 01.10.2014 based on period of delay.

> Abatement in respect of transport of goods by vessel increased from 50% to 60%.

> Renting of motor vehicle – service recipient and service provider, both to pay 50% each under reverse charge

(change w.e.f 01.10.2014)

> Cenvat Credit shall be taken within six months from the date of the invoice or challans or other documents specified (change w.e.f 01.09.2014)

> Service tax Rate increase from 12% to 14% (Including Cesses)