1. Localizations for India Implementation Guide
  2. Overview of Service Tax

Overview of Service Tax

Service tax is a central government tax that customers are charged on the services provided to them. Service providers are responsible for issuing invoices and charging service taxes to their customers. The service provider must deposit the tax amount to the tax authority after collecting the tax amount from the customer. The service provider must submit the service tax payment with the TR-6 Challan form to the designated branches. An additional surcharge called an education cess is also included in the service tax amount that the customer is charged.

Swachh Bharat Cess (SBC) is a cess that is levied and collected as service tax on all the taxable services. SBC is charged separately from service tax as a different line item in the invoice. It can be accounted and treated similarly to Education cesses. SBC is a nonrecoverable tax. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax. (Release 9.2 Update)

(Release 9.2 Update) Krishi Kalyan Cess (KKC) is a cess that is levied, charged, collected, and paid to the government as service tax on all the taxable services. KKC is charged separately from service tax as a different line item in the invoice. It can be accounted and treated similarly to Education cesses. KKC is a recoverable tax. KKC is integrated in the Cenvat Credit Chain. Therefore, you can use the credit of KKC. Further, cenvat credit of KKC can be utilized only for the payment of KKC.

The service tax credit can be claimed when the registered customer pays the taxes and taxable services to the service provider. The service tax for a particular period is payable on the value of the taxable service received only for that period and not on the gross amount charged. The service provider must issue a revised bill to the customer for the services received. For an individual proprietor or a partnership firm, the service tax must be paid on a quarterly basis. The payment should be made by the 25th day of the month following the quarter. For other entities, such as companies, the service tax should be paid on a monthly basis before the 25th day of the following month. If the service tax payment is delayed, the customer must also pay the penalty fees in addition to the tax amount.

The service provider must follow these legal provisions for the service tax:

  • If more than one location provides services, register only the centralized billing location.

  • If there is no centralized billing location, obtain registration from the appropriate tax authority for each location or office.

  • If the same location provides more than one service, submit a single application for registration to the tax authority that includes all the taxable services.

The service provider must file service tax returns in the Form ST-3 or ST-3A on a semi-annual basis to the tax authorities. The returns must be filed within 25 days of the semi-annual closing period with TR-6 Challan. If no service was provided in six months, the service provider must file a nil return.