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Service Tax Registration

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Description

Service Tax Registration is a tax registration required for businesses providing services in India. Service tax registration is an indirect tax wherein the service provider pays the tax and recovers the same from the recipient of the taxable service. At present, Service Tax is levied at 12.3% on the value of the taxable service. This includes Education Cess @ 2% on the service tax amount, and Secondary and Higher Education Cess @ 1% on the service tax amount. Service Tax registration is mandatory for every person or business in India that has provided a taxable service of value exceeding Rs.9 lakhs, in the previous financial year. Service Tax Registration is required for identification of the assesse, deposit service tax, file service tax returns and undertake various processes required under the Finance Act, 1994. Failure to obtain service tax registration would attract penalty in terms of section 77 of the Finance Act, 1994.


Background

Service tax was introduced in 1994 by the former Finance Minister Dr. Manmohan Singh. Until 2012 service tax was levied on specified list of services but now it is payable on every service provided except those services in the negative list. Composite services : There are services in which it is very difficult to calculate how much the customer has to pay for the service since it involves multiple services. For eg. Eating in KFC involves services of the waiters, cooks, cleaners, etc. In such cases service tax is levied on on the a specied amount of total bill as per the abatement scheme of the govt. – Service Tax in Restaurant is to be levied only on 40% of the Food Bill.


Service Tax Registration

Service tax is charged on CASH BASIS for individual service providers. Service tax is charged on ACCRUAL BASIS for companies. Individual/Partnership service providers need to deposit service tax quarterly. Companies and all other service providers need to deposit service tax monthly. Every Service Provider is required to apply for Service Tax Registration if the Value of Services provided during a Financial Year is more than Rs. 9 Lakhs, but the Tax would be payable only when the Value of Services provided is more than Rs. 10 Lakhs. Any delay in Service Tax registration can lead to penalties starting from Rupees Five hundred on delay up to first fifteen days. All service providers in India, except those in the state of Jammu and Kashmir, are required to pay service tax.

Advantages of Service Tax Registration

  • Every business with a turnover less than Rs. 9 lakhs is exempted from Service Tax registration.
  • In case of more than one premises for providing services, Centralized Registration can be done.
  • Service tax is charged on accrual basis. That is, companies are entitled to Service Tax as soon as services are provided.
  • Not applicable for services that are exported from India.
  • Provides protection from any tax related legal issues.
  • Ease of registering online.

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