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Online service tax registration for internet based startups


Dev Patel (Student CA Final )     21 December 2015

Dev Patel
Student CA Final  
 14 likes  508 points

| My Other Post

In India now most of the business is starting IOT ( Internet of things ) related startups. In that most of the are working as service provider like -

i. Ecommerce Marketplace i.e Flipkart/Snapdeal/Amazon/Paytm/Ebay/Shopclues or most of the ecommerce website,

ii. App based Cab service Ola/Uber/Meru/Taxi For Sure or Auto like Jugnoo

iii. Classifieds website like Quikr, Olx,

iv. Services Marketplace like Urbanclap,Nearby

v. Furniture based Urban Ladder,pepperfry,

vi. Online Content Creators like CCI Online Classes,Toppr,Simplilearn, Edureka

vii. Listing Website like Justdial, Indiamart, Sulekha

viii. Property Listing website like Housing, Commonfloor.

ix. Online Recharges Website like FreeCharge, Paytm.

x. CRM and Business tool Based Freshdesk, Zoho.

xi. Mobile Wallets like Mobikwik, Paytm, Oxizen.

xii.Online ticket bookings like redbus, abhibus, makemytrip etc.

So there are lot of startups which is working on commission based model or aggregator as marketplace so in all those startups service tax is applicable.

So before starting a service based internet startups entrepreneurs always wanna register their business but they are confused regarding the simple proprietorship firm or company registration.

even if they are thinking of the sole proprietorship firm but again confuse how to open a current bank account for the firm.

They are thinking about the VAT(Value Added Tax) but they don't know they have to pay service tax instead of VAT.

So Basically its a best for the small service based startups when they have no budget more than 7000-8000 rupees and wanna just test their ideas in the starting they should go for the sole proprietorship firm and apply for the service tax registration certificate & open a current bank account on that basis.

So let's learn how to apply for the Online Service Tax Registration in FAQ Manner :-

a) What is Service Tax Registration ?

Service tax is a tax on services provided in India. Service tax is levied under the Finance Act, 1994 on certain services as specified by the Government.

b) Who has to Pay Service Tax ?

Service tax is to be paid by the receiver of the service. However, service tax is a form of indirect taxation. Therefore, the person who provides the taxable service on receipt of service charges along with the service tax is responsible for paying the service tax portion to the Government. Also, small scale service providers who provide less than Rs.10 lakhs of taxable service a year is exempt from service tax.

c) What are taxable services ?

Almost all services provided in India are taxable. To find the complete list of taxable services, refer to Section 65(105) of the Finance Act, 1994. All taxable services as on 1.5.2011 are listed in Appendix-1.\

d) What is the rate of Service Tax ?

Service Tax Rate Now 14.5% (Updated with swachh bharat cess). Previous Rate is 12.36%, Check amendment here

e) What is Service Tax Registration Certificate ?

Service tax registration Certificate is a mandatory registration for service providers who have taxable service of value exceeding Rs.9 lakhs, in the previous financial year. Service tax registration facilitates in the identification of assessee, payment of service tax and filing of service tax returns.

f) Who must obtain service tax registration ?

Any person who has provided taxable service of value exceeding Rs.9 lakhs in the preceding financial year is required to obtain service tax registration. When a person commences a new business, he/she is required to obtain service tax registration within 30 days of commencement, if the business will have taxable service in excess of Rs.9 lakhs.

g) How to choose business name regarding the online service tax registration ?

Service tax registration certificate always on a business name. if it's a private limited company then it's on company name but if we talk about the sole proprietorship firm then its always on your brand name but the internet based startup have to must checkout its brand name is already registered or not with the ministry of corporate affairs or trademark registry.

Checkout here regarding How to Check Company name availability and search in India

g) How to apply for online service tax registration ?

First of all we have to do file ST-1(Form) that is simple application which can be file through service tax official website. Service Tax Department Official Website , after that we have to send the documents to service tax department and verify with the authorities.

h) How to issue Service tax registration final certification ?

Issue of Service Tax Registration :- As per Rule 4 of the Service Tax Rules, 1994 – The Superintendent shall after verification of the ST-1 Form either grant the Service Tax Registration Certificate (ST-2) to the Assessee or send intimation for non-acceptance of Service Tax Registration.  If either options is not exercised within 2 days by the Superintendent, the Service Tax Registration shall be deemed to be granted. The Service Tax Registration i.e. ST-2 Form would be issued in the manner as opted for by the applicant (By Post/Online).

i) What  Documents Required for the Service tax Registration ?

a. Copy of the PAN Card of the Proprietor or the Legal Entity registered.

b. Photograph and Proof of Identity of the person filing the application namely PAN Card, Passport, Voter Id Card, Aadhar Card, Driving Licence, or any other photo identity card issued by the Central Govt., State Govt., or Public Sector Undertaking.

c. Document to establish possession of the premises to be registered such as proof of ownership, lease or rent agreement, allotment letter from the govt, No Objection from the Legal Owner.

d. Details of the main bank account

For the full checklist about documents checkout Online Service Tax Registration in India

j) What Next after the Service tax registration as internet based service startup firm ?

After getting service tax registration certificate as a Sole Proprietorship firm some banks open a current account on the service tax certificate basis but some banks need a certification regarding the nature of the business or its from any practising chartered accountant or company secretary or lawyer.

Author is a Team Member at myonlineca technologies private limited. for the queries you can mail me at dev @ myonlineca.in

Source: wikipedia, Indian Startup Report




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