SERVICE TAX – PENALTIES

Service Taxes are applied to service providers for particular services that are supplied to customers. It’s classified as a Government Indirect Service Tax. If these taxes are unrecorded and unpaid, there are various levels of penalties, interest on late payment of service tax, to be paid under the Non-Conformance Service Tax Act.

Note: In India Service Tax is no longer applicable. All forms of Service Tax are now dealt with by the GST registration.

Service Tax- Non Payment

The following are penalties for non-conformance under the Service Tax Act.

• 1. Thirty (30) Days of Notice: If the Service Tax, plus any interest, is paid within thirty (30) days of receiving the service, there is no penalty.

• 2. Ten (10) Percent Penalty: In circumstances where a person, doesn’t pay their service tax, interest on late payment of service tax, they will be liable for a ten percent (10%) penalty.

• 3. Submission Waived: If the person, who has received a notice to pay a service tax, can come up with a good explanation as to why there has been a delay in payment, the penalty for non-payment of the service tax can be waived.

• 4. Reduced Penalties: In certain circumstances, it could be possible to reduce the penalty payment. This could be if the service tax is paid, along with any interest due, within a given period of time. Normally within thirty (30) days of the date of the service order. The penalty could be reduced by as much as twenty-five percent (25%).

Penalties

• 1. Not Obtaining Registration: The penalty for failure to obtain the mandatory tax service registration can mean a penalty of Rs. ten thousand (10,000). There are also Rs. 200 continuous daily default payments to consider as well as.interest on late payment of service tax.

• 2. Failure to Maintain Accurate and Complete Records: If a service taxpayer fails to maintain accurate records, or no records at all with supporting documents, the tax penalty that can be applied is up to Rs. ten thousand (10,000)

• 3. Late Submissions: The maximum penalty for a late Service Tax Return Submission is set at Rs. twenty thousand (20,000). The final figure calculated will be related to the number of delayed days.

3.1. Rs. Five hundred (500) if the delay for submitting the return is up to fifteen (15) days.
3.2. Rs. One thousand (1,000) if the delay for submitting the return is between sixteen (16) and thirty (30) days.
3.3. If the delay stretches to more than thirty-one (31) days a penalty of Rs. one hundred (100) per day will be added for each day onwards to the amount mentioned in 3.2.

Penalties to Individuals

Company secretaries, managers, directors, and other designated company officers can be hit with penalties of up to Rs. lakh one (1) if the company has committed any of the following offences:

• 1. Non Payment of Collected Tax: If Service tax has been collected, and not paid to the Central Government for a period of longer than six (6) months, will mean a penalty for a company official.

• 2. Incorrect Invoicing: Companies must prepare accurate invoices with all the correct references to tax. Failure to comply will mean a penalty for a company official.

• 3. Using Tax Income: If taxes are received for a service, and an official tax service receipt is not issued and the tax credit is used elsewhere, this will mean a penalty for a company official.

• 4. Tax Evasion: Any kind of tax evasion will mean a penalty for a company official.

Other Default Penalties

A penalty of Rs. ten thousand (10,000) can be imposed for any laws related to service tax rules being breached if the authorities believe the causes are deemed as reasonable.
Late Filing of Income Tax Returns – Penalties April 2018
With the Government 2018 Budget, there are new stipulations related to the late filing of Income Tax Returns. These are addressed in section 234F and cover AY 2018-19 from the 1st of April 2018. The Government has stated that Section 234F will be applied to 2017, 2018, and years onwards for all the Filing of Income Tax Returns. With this in mind, the penalties detailed below will not be applied to Income Tax Returns filed in the 2016-17 financial year-end or any relative assessments for 2017-18.

For the late, interest on late payment of service tax, filing of an annual Tax Return, in relation to Section 234F, taxpayers who submit late returns have to pay a penalty of up to Rs. ten thousand (10,000) based on the dates as follows:

• For a due date of 31st July the penalty for a late, interest on late payment of service tax, income Tax Return of Rs. five thousand (5,000) is applied. This is on the condition that the Tax Return is submitted before the 31st December. Should the return be submitted after the 31st December the penalty will rise to Rs. ten thousand (10,000)
Note: Should the taxpayers’ income be up to Rs. five hundred thousand (500,000) the penalty is reduced to Rs. one thousand (1,000).