be deposited into the government treasury. Prior to depositing the tax, the service provider can reduce the service tax paid to others, if any i. e. take credit for input tax.
All person providing taxable services should register with the central excise department of the concerned jurisdiction. Only a single registration is required even if services are provided from more than one premises, provided that the invoices are raised from one place. If invoices are raised from different premises, the registration should be obtained for each such premise where the billing is done. Even if the service provider offers more than one taxable service, multiple registration is not required. In certain cases, liability to deposit service tax to the Government also rests on the service receiver, either fully or in part( Partial Reverse Charge Mechanism). Besides, new Service Tax Rules to determine the service tax liability based on Place of Provision of service have also come into force.
In the case of proprietary concern or partnership firm, the service tax is required to be deposited on a quarterly basis. The payment should be made by 5th of the month following the quarter. In case of companies, the service tax is to be deposited into the government treasury on a monthly basis by 5th of the following month. In case of online deposit, service tax can be deposited by the 6th of the following month.
4.7.4 Central Sales Tax( CST)/ Value Added Tax( VAT)
Since April 1, 2005, all states in India have progressively replaced local sales tax with VAT. VAT is not much different from local sales tax regime, except that it considers tax on value addition at each level of the distribution network. The state VAT is essentially a tax on sale of goods and does not apply to services. There are five slab rates ie 0 per cent, 1 per cent, 5 per cent 12.5 per cent and 20 per cent.
VAT is levied on sale of goods within the state. If the sale is outside the state of origin, Central Sales Tax( CST) is levied. The standard rate of CST is 2 per cent provided both the seller and buyer are registered dealers. Else, the rate is as per VAT, as applicable in the state of the seller. CST / VAT is neither imposed on import of goods into, nor export of goods out of India.
4.7.5 Taxation of Works Contracts
The taxation of works contracts is governed through the provisions of VAT. A works contract is a composite contract involving both supply of material and labour. The tax is payable on any transfer of property in materials during the course of execution of the contract. Tax is to be deducted from the payments made to the contractor. The rate at which the tax is to be deducted varies from state to state.
4.7.6 Research & Development Cess
Research & Development Cess Act, 1986 levies a cess on all payments made by an industrial concern for imported technology. At present, the cess is levied at 5 per cent on payment towards technology imports. The R & D cess has to be deposited before the payment for technology import can be made and proof of deposit in respect of R & D cess may be submitted with the bank through whom the technology related payment is being made.
R & D cess can be deposited with any designated bank. Credit for R & D cess is available against the service tax charged on services related to intellectual property rights and technology transfers.
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