Payment Of Service Tax

• The Service Tax amount is required to be paid in Form TR-6 challan (yellow in colour) in the specified branches of designated banks. The list of such Banks and Branches is available in every Commissionerate of Central Excise. Different heads of accounts have been specified for different taxable service by the Govt. under which payment has to be made. While making the payment of service tax to the credit of Central Govt., head of account should be correctly and properly indicated under major and minor heads and sub-heads to avoid misclassification.
• If the assessee is an individual or a proprietary or partnership firm, the service tax is to be paid on quarterly basis. The payment is to be made by the 25th day of the month following the quarter. For example, Service Tax for the quarter ending 30th June is to be paid by 25th July.

In respect of other categories, the tax is payable on monthly basis and is to be paid by 25th day of the succeeding month.

Important Clarifications

• The Service Tax for a particular period is payable on the value of taxable service received in that period and not on the gross amount billed to the client.
• For payment of service tax, specific Bank has been nominated for every Central Excise Commissionerate. If service tax amount is deposited in a branch of Bank other than nominated Bank, it amounts to non-payment of Service Tax.
• The date of deposit of cheque is the date of payment of Service Tax. The Service Tax Rules as amended provide that it would suffice if the cheque is presented to the bank by the 25th of the month. However, if the cheque bounces, it would mean as if the tax has not been paid and the necessary penal consequences would follow.
• Service tax is payable on all taxable services rendered in India, whether to an Indian or foreign client.
• Services rendered abroad shall not attract service tax as the levy covers only the services provided within India.
• The Service Tax is to be paid on the value of taxable services which is charged by an assessee. Any income tax deducted at source is included in the charged amount. Therefore, Service Tax is to be paid on the amount of income tax deducted at source also.
• In case of delay in making payment of Service Tax to the Government within the prescribed or stipulated period, the interest is payable at the rate of 1.25% per month or part thereof. The interest is to be computed on the amount of Service Tax due or unpaid.
• For failure to pay the Service Tax, the assessee would be required to pay a minimum penalty of Rs.100/- to Rs.200/- for every day during which the failure continues. However, the penalty shall not exceed the amount of Service Tax that the assessee failed to pay Interest is also payable at the rate of 15 percent per annum.