Friendly introduction to service tax

Here a conversation between me and my friend who wants to start up his advertising business,please have a look:

My Friend’s Question1

My Friend: Hey! I need to start up my own advertising business.Is service tax applicable to me?

Me: Hey there,Congratulations for your new venture.Well ,service tax is applicable to you as the service you have chosen doesn’t fall in Negative List of Services:

(Reference:Section 66D of The Finance Act,1994)

His Question2

My Friend: Oh!are there any services on which there is no service tax?

Me: Yes,there are services specified in the negative list that are out of the service tax ambit.And some services have been exempted wide some notifications.

(Reference:section 66D of the Finance Act,Notification No.25/2012 etc)

His third Question

My Friend: Do I need to register under the service tax as I am providing a taxable service?

Me: Relax,you need not register  under Service tax as soon as you start providing services.Till the time the aggregate value of taxable services  do not exceed  9,00,000, you need not get registered.

But please note thet after aggregate value of taxable services exceed 9,00,000 then  you need to register within 30 days of the day when you cross the 9,00,000 limit.

(Reference: Section  69 read with Service Tax Registration of Special Category Of Person Rules 2005,also Rule 3 of service Tax rules)

His Fourth question

My friend:Ok,then do you mean that I need to pay service tax as well ,when I get registered?

Me:You still have a reason to smile.No need to pay service tax till your aggregate value of taxable services exceed 10,00,000 during a financial year.

(Reference :Notification No.33/2012)

His Fifth Question:

My friend: Do I need to pay service tax on the entire taxable value once I cross the limit of 10,00000?

Me: I knew that this would be your next question.Well ,I have prepared a table to help you.

Hope this table has helped you in understanding the exemption available.

(Refernce:Notification 33/2012 dated 20.06.2012)

His Sixth Question

My Friend: How will I pay service tax ,once I have  cross the limit of 10,00,000?

Me: Well,it is just simple.You can make an online payment by 6th of the next month  or in case you choose to pay through physical challan by 5th of the month following the month or quarter in which the invoices are issued.

Just note that when the service tax  paid by you exceeds 1,00,000,then the e-payment becomes mandatory.

(Refernce :Notification No.16/2013 and Rule 6 of Serviec Tax Rules)

His Seventh Question

My Friend: Thanks for the help so far,Can you just let me know whether I am required to furnish a Return under Service Tax?

Me: Even I wished this is your last question Yes dear ,as you are a  service tax assessee now,you are required to furnish a electronic return in Form-ST-3.The  return would be a half yearly return to be submitted by 25th of the month  following the half-year.

Also,be particular to furnish the return,otherwise you will end up paying a penalty of  upto rupees  20,000/-

(Reference:Section70 of Finance Act,1994 ,Rule 7 of service Tax rules)

Hope this was fun learning