Service Tax in India

A service provider who extends his services in any form of business such as consulting, software development, restaurant food service, car repair, so on and so forth attracts an additional taxable amount, that’s called Service tax. In short the service provider collects the service tax amount from customers and pays it on his business’s behalf to the government.


When to pay service tax?

In 1994, it was applicable only on few services. By 2012 the service tax was poised from restaurants, hotels and so on offering air conditioned environments and staying as well. Current service tax rate- 14%. This rate is applicable since 1st June 2015. Service tax is supposed to be paid quarterly or monthly.



Every service provider who is accountable to pay service tax shall apply for registration by using the application Form ST – 1 within 30 days from the date on which service tax is charged. This is very important.


  • Service Tax Penalties:
  • As per the provisions made under Sections 76, 77 and 78 of Finance Act, 1994, the central government may charge penalty, if you fail to meet the following conditions:
  • If you fail to furnish the ST-3 Return within the due dates which are 25th October and 25th April of every year. In that case, you will be liable to pay penalty fee which may extend up to Rs. 2000 based on the period of delay.
  • If a person fails to furnish information or appear before the Central Excise Officer when called for, he/she shall have to pay penalty up to Rs. 5000 or Rs. 200 per day after the due date, whichever is higher.
  • If you are a service provider and fail to register your service, it will draw penalty as per the regulations mentioned in section 77 of the Finance Act, 1994 and the penalty fee may go up to Rs. 5,000. Because, registration serves as an identity of an assessee and it is mandatory to register your services.
  • If an assessee fails to keep or maintain records of account and other documents required by service tax law, he/she shall be liable to pay penalty fee which may go up to Rs. 5,000.
  • If a person fails to pay tax electronically, he/she shall to pay penalty which may extend up to Rs. 5,000.
  • Penalty fee is also charged on non-payment or delayed payment of service tax.
  • Penalty shall be charged up to Rs. 5000, if a person issues an incorrect invoice or fails to support his invoice with valid details.
  • Penalty shall be charge if a person suppresses the value of taxable services or provides willful miss-statement about the service provided.