Service tax payment by big tax-payers enters electronic Era
In this era of information technology, business is bound to be at the speed of thought and the government does not wish to lag behind. Manual payments through bank challans and other conventional methods have experienced the hurdles of cheque clearances and difficulties faced by the finance department at the time of reconciliation of figures. Information technology, no doubt, has fostered all areas.
However, it is a double-edged sword as it makes payment procedures easy to execute but difficult to rectify the mistakes. Electronic payment, popularly known as e-payment, is an additional mode of paying Service tax to the government, apart from the conventional methods offered by banks to their customers. This scheme facilitates assessees by using the concept of "anytime anywhere". Payment can be made through this facility even after normal banking hours.
Such flexibility is not available in the conventional method of tax payment. Nonetheless, the public at large still has some inhibitions regarding the online method of payment, which still requires to win the trust and reliability of tax-payers. People prefer manual dealings as sometimes servers are down or due to heavy traffic connections are very slow. Insecure payment gateways also cause failure of transactions.
E-tax payment has been made mandatory with effect from October 1, 2006 for the assessee who has "paid" Service tax of Rs50 lakh (old) or more in the current financial year or the previous financial year. Recently, vide notification no. 01/2010-S.T. dated February 19, 2010, this limit has been reduced to Rs10 lakh.
Here, for considering the limit of Rs10 lakh, the word "paid" includes payment through cash as well as CENVAT credit. When tax is required to be paid electronically, failure to do so would lead to penalty under Section 77 of the Finance Act, 1994, which may extend to Rs5,000. There are many advantages of e-payment, including ease of operation and convenience.
The facility is available 24x7 and there are no queues and waiting. Minimum fields of the challan need to be filled and an auto fill lends a helping hand. Moreover, you get an Instant Cyber receipt with the bank's transaction number along with the acknowledgement of the challan, which can be retrieved again at any time as per your need.
As this is a 24x7 facility, it is operated through a system known as OLTAS (On-Line Tax Assessment System). All payments effected up to 8 pm will be treated as that day's receipt. Payments effected after 8 pm will be accounted as the next working day's receipt.
Certain doubts have also been raised as regards the interpretation of qualifying amount of Service tax of Rs10 lakh paid by the assessee. For a person providing taxable service from more than one premises, where each such premises is separately registered with the department for payment of Service tax, the criterion of Rs10 lakh would apply to each registered premises individually, as each registered premises is separately an assessee in terms of law.
If a person providing taxable service also receives taxable services on which he is liable to pay Service tax, and has single registered premises, the Service tax amount of Rs10 lakh would be the total amount of Service tax paid by him, i.e. Service tax paid on taxable service provided from and Service tax paid on taxable service received in such registered premises would be taken into account for the purposes of satisfaction of criterion of payment of Service tax amount of Rs 10 lakh. For illustration, if a person provides taxable service as well as receives Goods Transport Agency (GTA) service, then for considering the Rs10 lakh criterion total of taxable services provided as well as GTA services received should be considered.
For e-payment, assessees should open a net banking account with one of the authorised banks (currently there are 28 banks), list of which is available on the EASIEST (Electronic Accounting System in Excise and Service Tax) website of CBEC, maintained by NSDL (https://cbec.nsdl.com/EST/).
Payment through ICICI Bank, HDFC Bank and Axis Bank can be done by assessees for select commissionerates only, list of which is displayed in the aforesaid EASIEST website. Payment through all other authorised banks can be made for all commissionerates. One has to follow a simple procedure for e-payment: To pay Service tax online, the assessee has to enter the 15-digit PAN-based Assessee Code. Instantly, there will be an online check of the validity of the Assessee Code entered.
If the Assessee Code is valid, then corresponding assessee details like name, address, commissionerate code etc as present in the Assessee Code Master will be displayed, and based on the Assessee Code,
Service tax to be paid will be automatically selected. The assessee is required to select the type of tax to be paid by clicking on Select Accounting Codes for Service tax. The best part is that at a time the assessee can select up to six Accounting Codes. The assessee should also select the bank through which payment is to be made.
On submission of data entered, a confirmation screen will be displayed. If the taxpayer confirms the data entered in the screen, it will be directed to the net-banking site of the bank selected. The taxpayer has to login to the net banking site with the user id/ password, provided by the bank for net-banking purpose, and enter payment details at the bank site.
On successful payment, a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment made. The procedure is much simpler and easier than waiting for the bank clerk for long hours and at the end not getting a proper receipt. The Service tax department has already entered the e-era; now it's time that the service providers do not lag behind.