It is not just goods and products that are taxed in India. If you render services you will have to pay a service tax too. However, there are some exemptions in the form limits. Some kinds of activities are also totally exempted from being taxed for excise service tax. The list of services that are taxed changes from year to year as provided in the budget for that year. It is therefore important to see if your services fall within this group.
Here are some of the major activities that come within the scope of excise service tax – advertising, air ticketing, airport services, architects, ATM operations, beauty parlors, broadcasting, mobile & landline phones, construction, event management, dry cleaning, health clubs, opinion poll services and many others. This is a huge list and a fully comprehensive one can be obtained from the excise office.
Businesses Liable to Service Tax
Here are criteria that determine whether you should pay excise service tax or not. You are liable if:
1. Your service provides tangible benefit to the person availing it
2. The value of your services exceed Rs.9 lakhs in a year
3. If you are already collecting service taxes from your clients and customers
You have the option to pay service tax monthly, quarterly, half yearly or annual. If your business is private limited or public limited then the same should be paid on a monthly basis. There are multiple ways in which it can be paid. There is also an online payment system that many find easy and convenient to use.
Records to be maintained
As per rules of the excise act your businesses must maintain an exhaustive list of services you render to your clients and customers. The first and most important of all records is the invoice and the same should be provided to your customers every time you collect money.
The following information must be entered in the invoice: date on which service was rendered, the value of service, details of the service, percentage of tax collected and serial number of the invoice. The invoice must be in a printed format and the numbering must in serial.
In addition to the invoice, there are also numerous other records to be maintained as per the rules framed under the excise act. You will be required to file monthly returns in the form prescribed for this purpose. For an exhaustive list of all the books of accounts you need to maintain, see the excise service tax rules and schedules attached to the act.
Excise officials are empowered to inspect your office and examine the accounts at reasonable times. It is advisable to keep the same updated on a regular basis. If you fail to maintain the records, your excise officer will impose a fine and in addition to that he can also initiate legal action against you. It is therefore important to appoint an advocate or a chartered account. He will be able to guide you on these matters. It will be advisable to have an internal accountant in your office familiar with bookkeeping.
Importance of Registering
Here is why you need to register.
1. It will enable the officer to make a fair assessment and exempt you if you are eligible; otherwise tax will be collected irrespective of the threshold limit.
2. You will get a registration number, which should be found on all invoices. Without a registration number, you are prohibited from collecting service tax but still be liable to pay the same as per rules.
3. It will enable you to deposit money to the government by identifying your business.
