Five essential facts you need to know about service tax | SupportBiz

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Five essential facts you need to know about service tax

If your business is in advertising or motor vehicles repair, your income is from dry cleaning, renting an immoveable property, in storage facilities or as a tour operator you have to pay service tax. In simple terms if as an individual or a company you offer a taxable service you are liable to pay Service tax.

Service tax is an indirect tax levied on ‘taxable services’ and the responsibility of its collection lies with the Central Board of Excise and Customs (CBEC). The list of ‘taxable services’ has been broadened to increase revenue and to encompass almost all services under the net of Service Tax. The list now includes more than 100 categories.

Now, the interesting part is that this tax can be recovered from the receiver of the service as a normal part of the business transaction. The current rate of service tax is 12 percent and after adding education cess etc. the effective rate is 12.36 percent. In the 2012 Budget speech it was announced that service tax would be applicable on all services except those in the negative list of services.

Points to know

·         If the value of services provided by your business is more than nine lakhs in a financial year you have to apply for service tax registration. But, service tax is payable only when the value of services provided is more than ten lakhs.

·         Service tax registration is done online at

·         Individuals and partnerships have to make the service tax payment quarterly before the 5th of the preceding month and all other entities have to pay before the 5th of every month. Late payment should be made along with interest calculated at 18 percent simple interest. Businesses opting for online payment are given a grace period of one day and can deposit the payment on the 6th of the month. 

·         ST-3 Return is required to be filed twice in a financial year.  Return for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively.

If the service tax in the preceding year is ten lakhs or more then the payment of service is through internet banking only. Mandatory on-line return (e return) if service tax paid in proceeding year is rupees 10 lakh or more.