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We all should know about penalty scope of service tax | Company Vakil

Why? Penalty:

Service providers providing taxable services of over Rs.10 lakhs per annum are required to pay service tax in India. For proprietorship firms and partnership firms, service tax payments are due quarterly. For a private limited company, limited liability partnership and one person company, service tax payment are due monthly.  Service tax payment can be made online through net banking for all assesses having a service tax due of Rs. 1 lakh or more in the preceding financial year. Others can make the payment through cheque or demand draft. In this article, we look at the penalty for service tax late payment.

The Finance Act, 2015 has made changes to the service tax late payment provisions to ensure fairness is maintained across the board. Prior to the introduction of the Finance Act, 2015, service tax late payment penalties used to be Rs.100 per day or 1% per month, whichever is higher? However, the same has been changed as follows under the recent Finance Act, 2015.

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Amount of Penalty

Under the old provision, service tax late payment penalties used to be Rs.100 per day or 1% per month, whichever is higher.

As per the new provisions, late payment of service tax attracts a non-discriminatory minimum penalty of 10% of service tax liability. In case of fraudulent attempt to evade or make late payment of service tax, a minimum penalty of 100% of service tax liability is applicable.

Maximum Penalty

Under the old provision, service tax late payment penalty was capped at 50% of service tax liability. As per the new provisions, there is no maximum ceiling prescribed in case of fraud.

Waiver of Penalty

Under the old provision, service tax late payment penalty could be dropped on grounds of reasonable cause. As per the new provisions, late payment penalty can be completely waived if service tax and interest are paid within 30 days of serving of notice. In case of the existence of fraud, then 85% of the penalty amount can be waived off if the service tax liability + interest + 15% penalty is paid within 30 days of serving notice.

Service Tax Penalty Relaxation after Order

Under the old provision, service tax penalty could not be relaxed after an order. However, under the new provision, 75% of the penalty can be waived, if service tax payment and interest due is paid within 30 days of order. In the case of fraud, 75% of the penalty can be waived, if service tax payment, interest due 25% penalty is paid within 30 days of order. For individuals who decide to make the payment of service tax electronically via internet banking portals, the due date for the payment of such tax is July 6th, October 6th, January 6th, and March 31st of the financial year. For violating any provisions of law pertaining to service tax, a penalty of Rs.10, 000 can be levied. The penalty can be levied on reasonable causes. For individuals providing taxable services, service tax payments are due quarterly. If the service tax payment is paid electronically through internet banking, then service tax payments are due on the 6th of July, 6th of October, 6th of January and 31st of March & Penalty for Late Filing Service Tax Return. The penalty for late filing of service tax return is capped at a maximum of Rs.20,000 and is subject to the number of days delayed. More than 31 days delay in filing service tax return – Rs.100 per day of default.

Penalty Amount for Not Filing GST Return

    The GST penalty for not filing GST returns is Rs.100 per day of delay until the failure continues, but not exceeding Rs.5000.

    After the levy of penalty, if any entity having GST registration continuously fails to file GST returns, the GST registration would be cancelled and all the amount due would become payable, as assessed by a GST Officer.

    All businesses operating in India are required to file an income tax return each year. In addition to filing an income tax return, a business may also be required to file TDS return and pay advance tax to stay compliant under the Income Tax Act. India Filings is India’s largest tax services platform offering a range of services like incorporation, GST return filing, income tax filing and more. India Filings can help file income tax return for your business and ensure it remains compliant under the Income Tax Act and Rules. The average time taken to file an income tax return for your business is 3 to 5 working days. Get a free consultation on business tax return filing by scheduling an appointment with an India Filings Adviser.

Company Vakil provides services related to GST Registration

    GST return must be filed by all entities having GST registration. In case your business has GST registration, our Compliance Manager can help you file GST returns at an additional cost based on volume. The phrase “except as respects things done or omitted to be done before such super session” implies that the existing notification is replaced by the new notification to such an extent that the interest rate applicable would be the rates notified as per the notifications which were in force during the respective periods. So, the new notification changes the interest prospectively and will not apply to the omission to pay service tax before May 14, 2016. So, the old rates of interest will apply in your case.

    As per Rule 3 of the Place of Provision of Services Rules, 2012, ‘the place of provision of a service shall be the location of the recipient of service’. Section 66B of Finance act, 1994 says that service tax shall be charged on services provided or agreed to be provided in the taxable territory by one person to another. In your case, the recipient of service is located outside India — a non-taxable territory. The place of provision of your service is a non-taxable territory. So, the service you provide is not liable to tax.

Due Dates of Service Tax Payment & Return FY 2017-18 after GST

    Service tax is a tax which imposed on taxable services provided in India (other than J&K). Due dates for liability of depositing service tax in the account of government is 5th of every month for the month ended, if payment mode is Offline (i.e. for the month of January due date for depositing service tax challan is 5th February), and 6th of every month for previous month, if payment mode is 5th February), and 6th of every month for previous month, if payment mode is Online (i.e. for the month of January due date for depositing service tax challan is 6th February). After GST implementation, the service tax payment due dates and filing date are changed.

    The interest rate was so high that it was the demand of the industry to reduce the interest rate, accordingly the interest rates are reduced.

One Person Company (OPC):

Any One Person Company that provides services that are deemed to be taxable, with a value found to be more than Rs 9 lakhs over the course of a financial year, are required to make payment of service tax on a monthly basis. The due dates for service tax payment made by One Person Companies differ depending on the mode of payment chosen.

  • For One Person Companies that choose to make the payment of service tax electronically via internet banking portals, the due date for the payment of such tax is the 6th of each month, and March 31st
  • For One Person Companies that choose to make the payment of service tax via any other mode, the due date for the payment of such tax is the 5th of each month, and March 31st

Deadlines for Service Tax Payment:

The deadline for the payment of service tax differs from entity to entity. These deadlines are prescribed in accordance with Rule 6 of the Service Tax Rules 1994 and are to be made either on a monthly basis or a quarterly basis, depending on the type of entity making the payment.

All individuals who provide services that are deemed to be taxable, with a value found to be more than Rs 9 lakhs over the course of a financial year, are required to make payment of service tax on a quarterly basis. The due dates for service tax payment made by these individuals differ depending on the mode of payment chosen.

  • For individuals who decide to make the payment of service tax electronically via internet banking portals, the due date for the payment of such tax is July 6th, October 6th, January 6th, and March 31st of the financial year.
  • For individuals who decide to make the payment of service tax via any other mode, the due date for the payment of such tax is July 5th, October 5th, January 5th, and March 31st of the financial year.

Proprietorship:

Any proprietorship that provides services that are deemed to be taxable, with a value found to be more than Rs 9 lakhs over the course of a financial year, are required to make payment of service tax on a quarterly basis. The due dates for service tax payment made by proprietorship differ depending on the mode of payment chosen.

  • For proprietorship that choose to make the payment of service tax electronically via internet banking portals, the due date for the payment of such tax is July 6th, October 6th, January 6th, and March 31st of the financial year.
  • For proprietorship that choose to make the payment of service tax via any other mode, the due date for the payment of such tax is July 5th, October 5th, January 5th, and March 31st of the financial year.

Partnership Firm:

Any partnership firm that provides services that are deemed to be taxable, with a value found to be more than Rs 9 lakhs over the course of a financial year, are required to make payment of service tax on a quarterly basis. The due dates for service tax payment made by partnership firms differ depending on the mode of payment chosen.

  • For partnership firms that choose to make the payment of service tax electronically via internet banking portals, the due date for the payment of such tax is July 6th, October 6th, January 6th, and March 31st of the financial year.
  • For partnership firms that choose to make the payment of service tax via any other mode, the due date for the payment of such tax is July 5th, October 5th, January 5th, and March 31st of the financial year.

 

Conclusion:

In this article, everything is mentioned about penalty scope in service tax and we all must aware with this penalty.

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