Learn the details about Service Tax Late Payment Penalty, delving into the consequences of delayed tax payments. Get insights into when & how they are applied.
Service tax payment – Overview
Service tax payment applies to various entities, including individuals, companies, proprietorship firms, and limited liability partnerships, settled via methods like cheques. Failure to comply with regulations may result in penalties for these entities. Service tax was originally implemented in 1994 on telephone services, non-life insurance services, and stockbroker services because services account for a sizable portion of GDP. Over time, several new services were added to the tax net, and as of right now, 100 services are liable to service tax.
Any assessee who is found to have violated any of the terms outlined in the rules and regulations about service tax may be subject to additional taxes or charges in the form of penalties. If the assessee in question has consciously chosen to behave contrary to the behavior’s provisions, then these penalties will be imposed. However, under Section 80 of the Finance Act of 1994, an assessee is exempt from penalties if they can present documentation of justifiable reasons for their failure to pay service tax. Here are some of the penalties levied:
Penalty for Non-payment of Service Tax
- Non-payment of service tax incurs a 10% penalty
- No penalty if both service tax and interest are paid within 30 days of notice
- Within 30 days of order, pay service tax, interest, and a reduced 25% penalty specified
- Valid documentation explaining delay or non-payment may lead to a waiver of the penalty.
Penalty for Not Obtaining Registration
Not registering for service tax may result in a penalty of ₹10,000 or ₹200 for every day of continuous default.
Penalty for Non-maintenance of Documents
If you fail to maintain service tax-related records can lead to a penalty of up to ₹10,000.
Penalty for Not Furnishing Required Information
If you are not able to provide the documents when requested by an officer can result in a penalty of ₹10,000 or ₹200 per day of continuous default.
Penalty for Submitting Incorrect Invoices
In case of providing incorrect or incomplete bills and invoices may lead to a penalty of up to ₹10,000.
Penalty for Late Filing Service Tax Return
Late filing incurs penalties as follows:
- Up to 15 days delay: ₹500
- 16 to 30 days delay: ₹1,000
- More than 31 days delay: ₹100 per day of default, capped at ₹20,000.
| Did you know? The Finance Act of 1994 states in Section 64 that all of India is covered by the Act, with the exception of the State of Jammu & Kashmir. Therefore, Jammu & Kashmir services are not subject to service tax.All of India is subject to service tax, with the exception of Jammu & Kashmir. It also includes the specified regions of India’s Exclusive Economic Zone and Continental Shelf. |
FAQs
What is the penalty under section 77 of Service Tax?
According to Section 77 of the Finance Act, 199412345, there is a penalty of up to ten thousand rupees for anyone who is required to register or pay service tax but neglects to do so in accordance with Section 69's provisions or the rules made under this Chapter.
What is the time limit for service tax Notice?
The standard period for issuing a show cause notice is eighteen months from the relevant date; but, in exceptional situations, this period may be extended to five years.
What is the extended period of time for service tax?
The Finance Act of 1994's Section 73(1) allows the SCN to invoke the prolonged term of limitation, which allows them to demand tax for up to five years.
What is the 25 penalty under service tax?
If service tax and interest are paid within 30 days of the notice being served, there is no penalty. 25% of the penalty must be paid as specified in the order if service tax, interest, and a reduced penalty are paid within 30 days of the order being served.
What is Section 78 penalty service tax?
Section 78 of the Finance Act of 1994 imposes penalties. Penalties are assessed under this provision in the following scenarios: service tax not levied, not paid, short levied, short paid, or mistakenly reimbursed.
Can penalty under service tax be waived?
While the aforementioned provisions do carry a penalty for the circumstances they cover, Section 80 of the Finance Act of 1994 stipulates that no penalty will be imposed for any failure mentioned in the said provisions provided the Service Tax assessee can demonstrate sufficient cause for the failure.
What is the limit of service tax payment?
The service tax provider must file for registration for service tax within 30 days of his revenue exceeding ₹9 lakhs, even though service tax is only required to be paid when the total value of services rendered surpasses ₹10 lakhs in a financial year.
What is the rule of service tax?
The Central Government must receive payment for service tax by the fifth of the month after the month in which it was received. The tax must be deposited by the assessee at a bank that the Central Board of Excise has chosen.
What is the due date for Service tax return?
Service taxes are paid quarterly by proprietorship, partnership, and individual services companies. The tax is due on the sixth of July, the sixth of October, the sixth of January, and the thirty-first of March if it is deposited via the web portal.
What is the date of payment under service tax?
Service tax is due on a quarterly basis for individuals, proprietorship concerns, and partnership firms. Service tax payments must be made by the 5 of the month that follows the relevant quarter (or, if paying online, by the 6 of the month that follows the relevant quarter).
What is Section 73 of the service tax?
According to Section 73 of the Finance Act of 1994, the Central Excise Officer may, within 18 months of the relevant date, serve notice on the person liable for the service tax that has not been levied, paid, or that has been short-levied, short-paid, or the person to whom such a tax refund has been mistakenly made, requiring him to justify why he should not pay the amount designated in the notice12.
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