Q. How does a person become an Amway Business Owner? Answer
Q. Is it expensive to start an Amway business? Answer
Q. Are Amway Business Owners employees of the company? Answer
Q. How many products does Amway offer? Answer
Q. How can I buy Amway products? Answer
Q. Is Amway publicly or privately held? Answer
Q. When was Amway founded? Answer
Q. Do Business Owners have to make minimum purchases? Answer
Q. Does Amway have any influence over a Business Owner's business? Answer
Q. Does Amway really give people more free time, or does it require a lot of time to succeed? Answer
Q. Is product pricing competitive? Answer
Q. Is it true that you dont have to sell—just buy the products for yourself and recruit others to do the same? Answer
Q. How do Amway products rank in comparative tests? Answer
Q. What does Amway see as the role of women in the Amway business? Answer
Q. Is Amway's business continuing to grow? Answer
Q. Is the business plan today as valid as it was over 40 years ago? Answer
Q. What are the Financial Consideration after Joining ? Answer
Q. What are the Applicable Income tax rates ? Answer
Q. What are the Amway Return Policies ? Answer
SERVICE TAX FREQUENTELY ASKED QUESTIONS
Q. General Answer
Q. Registration Answer
Q. Payment of Service Tax Answer
Q. Filing of Returns Answer
Q. Exemptions Answer
Q. Penal Provisions Answer
Q. Relevant Forms Answer
How does a person become an Amway Business Owner?
A person must be sponsored into the Amway business by an active Amway Business Owner. The sponsoring Business Owner is responsible for teaching the new Business Owner about the Amway business.
Top
Is it expensive to start an Amway business?
No. In fact, only a small fee is required to become an Amway business owner.
Are Amway Business Owners employees of the company?
No. Amway Business Owners are independent contractors and not employees of the company.
How many products does Amway offer?
Amway offers more than 75 unique, high quality products carrying brand names including NUTRILITE™ Vitamins and Food Supplements, ARTISTRY™ Skin Care, SATINIQUE Advanced™ Hair Care System, Dynamite Male Grooming range, L.O.C.™ Multi purpose cleaner and SA8™ Laundry System. Visit the products section for more information on these and other brands.
How can I buy Amway products?
Amway TM products are sold by Amway Business Owners only. For more information, visit the How to Buy section.
Is Amway publicly or privately held?
Amway Corporation is part of the Alticor family of companies, privately held by the DeVos and Van Andel families.
When was Amway founded?
Amway was founded in 1959 by Rich DeVos and Jay Van Andel. For more information, visit the History section.
Do Business Owners have to make minimum purchases?
No. Amway Business Owners are not required to make any minimum or ongoing purchases.
Does Amway have any influence over a Business Owner's business?
To become an Amway Business Owner, an individual must sign an agreement to abide by Amway's Rules of Conduct. Each year, they voluntarily renew that promise when they renew their Amway business.
Our Rules promote ethical direct selling principles and provide practical procedures for all Business Owners to observe in operating their Amway businesses. The Rules of Conduct, which are largely in accordance with local, legal requirements, mandate certain business practices to ensure compliance with all laws and regulations and to preserve harmony among Business Owners. Amway has the right to enforce these Rules through its contract with its Business Owners—up to and including terminating that contract.
Does Amway really give people more free time, or does it require a lot of time to succeed?
Like any small business, it takes hard work to succeed in the Amway business, and that requires time and commitment, especially in the beginning. Our research shows that most people understand this very well
But the Amway business does offer flexibility for our Business Owners in running their business. Unlike most conventional jobs, Amway Business Owners can work at home, when they want, at their own pace, on their own schedule, according to the goals they have set for themselves. For some, that means if they need an afternoon to attend their childs school play, play golf or see a friend, they can arrange their work schedule to allow this. The choice of when, where and how much time to devote to their Amway business is theirs alone.This flexibility is one important reason why the opportunity appeals to so many people around the world.
Is product pricing competitive?
Our products are price-competitive and good value for the money. We know this from our market surveys, Business Owner feedback and, ultimately, by the sales growth of all our product lines over the years.
Our data shows that while some of our products are more expensive than their counterparts, others are less expensive and most are competitively priced. Products that are more expensive usually have greater features and benefits over competitive goods.
It is also important to note that Amway Business Owners are selling more than just products—they're also selling an exceptional level of service. Amway products are delivered directly to the customer and are backed by the Amway Satisfaction Guarantee. Amway's extensive product line makes it possible for customers to do virtually all their shopping without leaving home or worrying about the hassles of returns. Their business owner does all the work for them. This convenience is very appealing to many of today's busy people, and for many it is worth a little bit more.
The consumer is the ultimate judge of price and value, and our sales success over the years speaks volumes about our product value and customer satisfaction.
Is it true that you dont have to sell—just buy the products for yourself and recruit others to do the same?
You cant make money in the Amway business unless Amway TM products are sold. To say otherwise misrepresents the Amway Sales and Marketing Plan—a violation of our rules.
How do Amway products rank in comparative tests?
Amway products are rated very favorably for performance in various tests around the world.
We are proud of our products and our commitment to research and development. Unlike other direct selling companies that use outside contractors to develop and manufacture most, if not all, of their products, we have our own extensive R&D and manufacturing facilities and make major investments each year in this area. We currently own more than 450 patents worldwide, and we currently employ more than 450 R&D professionals working in 65 labs around the world.
Consumers are the ultimate judges of product quality. They may buy a product once, but if its quality and value dont measure up, they probably wont buy it again. Amways own consumer research and sustained global success show that consumers think our products are top rate.
What does Amway see as the role of women in the Amway business?
The Amway business opportunity is open to everyone, regardless of gender, race, age, religion, or political or other personal beliefs. The Amway business appeals to women, men, couples, and families from all backgrounds.
Amway has helped to empower millions of women around the world by offering them a low-cost, low-risk opportunity to achieve their goals by owning their own business. This fact is especially gratifying to us. There are countless examples of women who have achieved success in the Amway business.
Is Amway's business continuing to grow?
Yes. There remain many opportunities for Amway's business to grow.
Amway will also continue to explore new opportunities for growth in well established countries, including innovative products and new ways for people to become involved with Amway—as Business Owners, product retailers, or consumers.
Right now, Amway is investing in enhancing and expanding our manufacturing and distribution facilities to support the growth we expect in the coming decades. The prospects for growth remain strong.
Is the business plan today as valid as it was over 40 years ago?
Absolutely. The Amway Sales and Marketing Plan, with its roots in the basic elements of free enterprise, is a proven business concept. Originating almost half a century ago, this business plan has been continually refined and enhanced to meet the needs of entrepreneurs.
FINANCIAL CONSIDERATION AFTER JOINING
VAT Registration and Octroi.
To carry out resale of Amway products, you may be required to register with the VAT authorities under the Value Added Tax (VAT) Act of the State in which you are carrying out this business. Under the VAT Act, there are certain threshold limits for registration. Please refer the table below:
Sr.
State
Registration Threshold (Rs.)
1
ANDAMAN NICOBAR
N.A
2
ANDHRA PRADESH
500,000
3
ARUNACHAL PRADESH
4
ASSAM
200,000
5
BIHAR
6
CHATTISGARH
7
CHANDIGARH
8
DELHI
1,000,000
9
GOA
10
GUJARAT
11
HARYANA
12
HIMACHAL PRADESH
600,000
13
JAMMU & KASHMIR
750,000
14
JHARKHAND
15
KARNATAKA
Every dealer who has reason to believe that his taxable turnover is likely to exceed Rs. 2,00,000/- in a year, or whose taxable turnover exceeds Rs.15,000/- in a month.
16
KERALA
17
MAHARASHTRA
18
MADHYA PRADESH
19
MEGHALAYA
100,000
20
MIZORAM
300,000
21
NAGALAND
22
ORISSA
23
PONDICHERRY
24
PUNJAB
25
RAJASTHAN
26
TAMIL NADU
27
TRIPURA
28
UTTAR PRADESH
29
UTTARANCHAL
30
WEST BENGAL
Notes:
1. The figures mentioned above are for general business information only, and should not be construedas conclusive support for any act or omission on the part of ABOs.
2. Please consult your VAT/Sales Tax consultant for conduct of Amway business.In case you expect inter state sales, then you are required to register with the VAT authorities of the State in which you are carrying out this business under the Central Sales Tax (CST) Act. There are no threshold limits for registration under the CST Act, and you are expected to register under the CST and VAT Act from the time you intend to carry out the first interstate sale.In case of resale of Amway products, you are expected to issue invoices to your customers, especially if you are registered for VAT purposes. However, if you are not registered for VAT and do not expect to reach the threshold limit of your state during the financial year, you need not issue invoices. In this case, you are expected to issue a Customer Receipt (SA-107-ID).Any amount collected by you VAT/CST on invoices raised by you must be deposited by you at a nationalized bank and a copy of the deposit challan submitted along with your VAT/CST return to the VAT authorities.However, before acting on the above information you are requested to consult your Sales Tax / VAT consultant in your respective states.
OCTROI
Octroi is a Municipal entry tax charged at the entry point of a town or city. This tax is payable in cash by the transporter of goods entering the city or town for commercial purposes. Octroi is payable only if the entry address or point of delivery of the goods being sold fall within the Municipal (Octroi) limits of the town or city. In case you are selling Amway products in any town or city where Octroi is applicable, then you may be required to pay this tax. However, no prior registration is required for payment of Octroi. Currently, Octroi is applicable only in the State of Maharashtra.Note: The views and the figures expressed here are for general information only, and should not be construed as conclusive support for any act of omission or commission on part of the Distributors.Contact for further detailsThis is the information which is appropriate and relevant to ABOs as far as Sales Tax/VAT is concerned. For any other information required by them on Sales
Tax/VAT, they can have their specific queries sent to the following IDs:
abraham_ninan@amway.com
dinesh_gora@amway.com
OR specifically
For North
h_ramesh@amway.com
For South
manohar_shah@amway.com
For East
prasenjit_raha@amway.com
For West
harsh_khatri@amway.com
Applicable Income tax rates
The applicable INCOME tax rates in case of individuals# (Residents and Non-Residents)
Financial Year : 2007-2008
Assessment Year : 2008-2009
Income
Male of age less than 65 years and Non residents
Income equal to or less than Rs.1,50,000
Nil
Income more than Rs. 1,50,000 but less than or equal to 3,00,000.
10% of (Taxable income- Rs 1,50,000)
Income more than Rs. 3,00,000 but less than or equal to 5,00,000.
Rs 15000 +20% of (Taxable income- Rs 3,00,000)
Income more than Rs. 5,00,000.
Rs. 55000 + 30% of (Taxable income- Rs 5,00,000)
Resident female of age less than 65 years.
Income equal to or less than Rs.1,80,000
Income more than Rs. 1,80,000 but less than or equal to 3,00,000.
10% of (Taxable income- Rs 1,80,000)
Rs. 12000+ 20% of (Taxable income- Rs 3,00,000)
Income more than Rs. 2,50,000.
Rs. 52,000 + 30% of (Taxable income- Rs Rs. 5,00,000)
Resident senior citizen i..e individual having age of 65 years or more
Income equal to or less than Rs.2,25,000
Income more than Rs. 2,25,000 but less than or equal to 3,00,000.
10% of (Taxable income- Rs 2,25,000)
Rs. 7500+20% of (Taxable income- Rs 3,00,000)
Rs. 47,500+ 30% of (Taxable income-Rs.2,50,000)
Notes
Note: The views and the figures expressed here are for general information only, and should not be construed as conclusive support for any act of omission or commission on part of the Distributors.
Amway Returns Policy
Amway stands firmly behind the quality of products offered and the success of the business opportunity' it provides. The policy is a clear statement of confidence in the quality of Amway's products.
Returns Policy - Guidelines
• If an ABO is not completely satisfied with any of the products, the product(s) can be returned within 30 days from the date of purchase. • Any ABO who is leaving the business can return excess saleable products (Six or more products on a single invoice) to the company if they had been purchased not more than 60 days earlier. • A resigning ABO who is returning product must provide the following:
Return of Products
PERIOD
CONDITION
PAYMENT
Marketable
Invoice
Within 30days
Y
DAP
N
DAP less Sales Tax
Excess stock Amway Branded Products
(6 or more eaches of a particular SKU on a single invoice)
Within 60days
DAP**
DAP less Sales Tax**
**10% handling charges will be deducted
Within 90days
Excess Stock Amway Business Kits (3 or more kits constitute excess stock)
Within 90 days
Reference Notes :
• Period of return for products is calculated as the number of days from the Invoice Date, to the date of return at the Amway Office. In case of mailed return, the period is calculated from Invoice Date to the date on which the stock is received at the Amway Office (not the date on which the return is booked through mail). In case of kits, period of return is calculated as the no. of days from entry of application to date of return at Amway office.
• Condition refers to the condition in which the stock is received back from the ABO as a return. The product can be marketable' or unmarketable' depending on the condition of the returned stock as assessed by the Returns executive at the Amway office.
• Marketable' refers to stock which is returned INTACT, without the seal having been broken. 'Unmarketable' refers to stock received in opened or used condition or where the packaging has been damaged / tampered.
• Excess Stock return for the products and kits is as follows: Product return greater than or equal to six in number. Kits return greater than or equal to three in number.
• No return refund after 30 days for products, 90 days for kits.
• Sales tax will not be refunded for products / Kits which are returned in Unmarketable condition.
• Return policy is not applicable to (1) Co-branded, catalogue items that are sold by Amway in partnership with other companies, e.g. Braun and (2) No Longer Available articles, e.g. Gift Pack. The return policy is normally not extended to products sold through promotional offers (unless specifically mentioned).
• Total returns cannot exceed the quantity appearing on the Invoice.
General
1.1. What is Service Tax?
It is a tax levied on the transaction of certain specified services by the Central Government under the Finance Act, 1994. It is an indirect tax, which means that normally the service provider pays the tax and recovers the amount from the recipient of taxable service.
1.2. What is the meaning of Service?
Service has not been defined any where in the Act or in the rules, whereas the dictionary meaning of service is an act of help or human intervention, voluntary in nature which may be tangible or intangible. Service is an act of helpful activity, act of doing something useful, intangible, commodity in the form of human effort and it excludes sale of goods, commodities or properties. In this there exist service provider and service receiver.
1.3. Which government department is administering the Service Tax?
Service Tax is an indirect tax and is administered by CBEC i.e. Central Board of Excise and Customs through its Commissionerates and Office of Director General of Service Tax. Service Tax cells setup by Central Excise and Customs are there throughout the country to administer the service tax.
1.4. How to decide whether Service Tax is payable by a person?
A. As a Service provider, you should check that:
(i) Whether the service rendered by you is falling under the scope of any of the taxable services listed in the Service Tax Law.
(ii) Whether there is a general or specific exemption available for the category of service provided under any notification.
(iii) Whether you are entitled to the value based exemption available for small service providers as explained in Q.No.5.1 of this Booklet.
(iv) Whether the service charges were received for the services provided or to be provided.
In case the service provided by a person falls within the scope of the taxable services and if such service is not fully exempted, the service tax is payable on the value of the taxable service received subject to the eligible abatements, if any (please also refer Q. No. 1.6)
If you have any doubts, please contact your nearest Help Centre or Central Excise Commissionerate/ Service Tax Commissionerate visit www.cbec.gov.in to find the addresses and telephone numbers for further clarification.
1.5. What is the rate of Service Tax?
At present, the rate of Service Tax is 12%, payable on the ;gross value of taxable service;. In addition to this, Education Cess is payable at the rate of 3% on the Service Tax amount.
(Total: 12.36% on the value of the taxable service). Refer section 66 of the Finance Act, 1994 (12% Service Tax), Section 85 of the Finance Act, 2004 (2% Education Cess) and Section 126 of the Finance Act, 2007(1% Secondary and Higher Education Cess).
The rate of tax may change during Annual Budget by a Finance Act.
History of rates:
1.6. What is the basis of calculating the value of taxable service;?
Normally, the ;value of taxable service; means, the gross amount received by the service provider for the taxable service provided or to be provided by him. Further for certain services, a specified percentage of abatement is allowed from the gross amount collected for rendering the services, subject to certain conditions.
1.7. Who is liable to pay Service Tax?
Generally, the person who provides the taxable service on receipt of service charges is responsible for paying the Service Tax to the Government. Although in some cases service recipient are also liable to pay Service Tax.
(For further reference, please refer Sec.68(2) of the Act read with Rule 2(d) of the Service Tax Rules, 1994).
1.8. Does Service Tax provisions are applicable to whole of India ?
Yes, the Statutory provisions of the Finance Act, 1994 (Chapter V and VA) extends to whole of India except the State of Jammu & Kashmir.
1.9. When and how service tax is charged and what is a taxable event?
The taxable event is rendering of service and receipt of amount on which service tax is levied. If the service has been provided before it became a taxable service and payment is received after it becomes taxable services, there will be no levy of service tax.
1.10. Whether all services are subject to service tax?
No, the services which are covered under section 65(105) as taxable services are subject to levy service tax. Therefore, only selected services are there on which service tax is levied.
Registration
2.1. What is meant by registration? Who should apply for registration under Service Tax law?
v Every person providing a taxable service of value exceeding Rs. 9 lakhs,(from 01.04.2008)* is required to register with the central excise or service tax office having jurisdiction over the office of such service provider.
v In case a recipient is liable to pay service tax, registration is required by him.
v There is also provision for centralized registration Refer Q.No. 2.8.
v The Input Service Distributors also require registering themselves.
* Rs 3 lakhs (upto 31.03.2007) or Rs 7 lakhs (from 01.04.2007 to 31.03.2008)
The CBEC has recently issued a circular on procedural issues in service tax Circular No.97/8/20007, dated 23.8.2007.
2.2. Is Registration necessary under Service Tax?
Registration is identification of an assessee. Identification is necessary to deposit service tax, file returns and undertake various processes ordained by law relating to service tax.
2.3. What is meant by the term assessee under Service Tax?
Assessee means a person liable to pay Service Tax and includes his agent.
2.4. When is assessee required to obtain registration?
i) When a person commences business of providing an existing taxable service, he is required to register himself within 30 days of such commencement.
ii) In case a new taxable service is introduced, an existing service provider must register himself, unless he is eligible for exemption under any notification, within a period of 30 days from the date of new levy.
2.5. What is meant by the term person appearing in the definition of taxable service?
The word ;Person; shall include any company or association or body of individuals, whether incorporated or not. Thus this expression includes any individual, HUF, proprietary firm or partnership firm, company, trust, institution, society etc.
2.6. What is the procedure for Registration? Who should be approached for Service Tax Registration?
An application in Form ST-1 (in duplicate) has to be filed before the jurisdictional Central Excise/Service Tax officer. Certain documents to verify the correctness of declaration in the said form as may be required by the registering authority, such as copy of PAN card, proof of address of business premise(s), constitution of the business [proprietorship, firm, company, trust, institute etc.] etc. The copies may be self-certified by the applicant. In case of doubts in select cases, original documents may have to be presented for across the counter verification and return.
2.7. In how many days the Registration Certificate is to be issued?
The Registration certificate (Form ST-2) would be issued within a period of seven days from the date of submission of application ST-1 along with all relevant details/documents.
In case the registration certificate is not issued within seven days, the registration applied for is deemed to have been granted. (Rule 4(5) of the STR, 1994)
2.8. Is there any provision for centralized registration?
Service providers having centralized accounting or centralized billing system, at their option, can have Centralized registration at one or more places.
Commissioner of Central Excise/Service Tax in whose jurisdiction centralized account or billing office of the assessees exists, is empowered to grant centralized registration.
2.9. Does one require registration certificates for each service separately?
Only one Registration certificate is to be taken even if the person provides more than one service from the same premises for which registration is sought.
If there is centralized registration, only one registration certificate is required for services provided from different premises, declared in the application for centralized registration.
2.10. Is PAN allotted by the Income Tax Department a required for obtaining Service Tax Registration?
Having PAN is essential because the Service Tax Registration number is generated based on the PAN issued by the Income Tax Department which is termed as STC Code No. However, in the absence of PAN, a temporary Service Tax registration number would be issued for assessees who are not having PAN at the time of filing the application (ST-1) for Service Tax registration till such time they obtain PAN. Once the PAN is obtained, the Service Tax assessee should obtain the PAN - based Service Tax Registration number.
2.11. What is meant by Service Tax Code (STC) and is it based on PAN?
The department has decided to introduce allotment of 15 digits alphanumeric Service Tax code(STC) number to all service tax assessees which is based on the PAN issued by the Income Tax department PAN based. The main objective of allocating a number is to identify the concerned person where he is located and registered. The first ten digits shall be PAN allotted to the assessee, the next two digits will comprise of a fixed two character service alpha code followed by three digit numeric code for the premises.
2.12. What is to be done in case the assessee discontinues the business of providing taxable service?
The Service Tax Registration certificate (ST-2) should be surrendered to the concerned Central Excise / Service Tax authorities.
2.13. What is to be done in case the business is transferred from one person to another person?
In the event of transfer of the business, the transferee should obtain a fresh certificate of Service Tax registration. The transferee will have his own PAN.
2.14. Whether a service provider can make payment of Service Tax and file returns before the grant of registration by the proper officer?
No. However, service provider should apply well in advance to obtain registration, which is normally granted within 7 days of filing of application. Since service tax is payable once in a month or quarter, an assessee gets sufficient time for registration.
2.15. What is to be done if a registration certificate issued by the Department is lost, can duplicate be issued? What is the procedure in this regard?
The assessee is required to make written request for duplicate registration certificate. The same will be issued by the Department after suitable entry in the registers/records of the Office.
2.16. If the assessee changes the entity from Proprietorship to Partnership or vice versa, whether the same Registration Certificate can be amended?
No, in case of changes the constitution of firm from Sole Proprietorship to Partnership or vice versa, the same Registration Certificate can not be amended. The assessee has to get fresh registration certificate and has to surrender the earlier one.
2.17. For calculating rupee nine lakhs value of taxable service for registration of small service providers, whether all taxable services provided by assessee will be considered?
Where a provider of taxable service provides one or more taxable services from one or more premises, the aggregate value of all such taxable services and from all such premises and not separately for each services or each premises shall be taken into account for computation of aggregate value of taxable service.
Payment of Service Tax
3.1. How to pay Service Tax?
You may pay service tax by G.A.R.7 (previously known as TR6 Challan) in the specified branches of the designated banks. The details of such Banks and branches may be obtained from the nearest Central Excise Office/Service Tax Office.
Service Tax can also be paid electronically, called e-payment facility.
3.2. What are the due dates of payment of Service Tax?
For individual or a proprietary or partnership firm Quarterly- by the 5th day of the month following each quarter and by the 6th dayof the month following each quarter if the duty is deposited electronically through internet banking. For example, Service Tax for the quarter ending 30th of June is to be paid by 5th or 6th of July as the case may be.
For all other categories (Company, Society, Trust etc.) -Monthly -by the 5th day of the succeeding month and by the 6th day of the succeeding month if the duty is deposited electronically through internet banking;
Exception:
For the month of March or quarter ending March,all assessees have to pay by 31st of March of the Calendar year (Rule 6(1) of the STR, 1994).
3.3. Can excess payment be adjusted while paying tax for the next month or quarter?
Yes.
3.4. What is the head of account into which the Service Tax amount is to be paid in respect of various services?
Separate Head of account has been specified for each taxable service. This must be mentioned on G.A.R. 7 (previously known as TR-6) challans for proper accounting.
3.5. What is TR-6 or GAR-7 challan? Where is it available?
GAR-7 or TR-6 challan is the document for payment of service tax.
GAR-7 or TR-6 challan is also available in any stationary shop selling government forms. The format is also given on web-site www.cbec.gov.in
3.6. Can the Service Tax be deposited in Non-designated banks?
No. For payment of Service Tax, specific bank has been nominated for every Central Excise/Service Tax Commissionerate. If Service Tax is deposited in a Branch /Bank other than the nominated Bank / Branch, it amounts to non-payment of Service Tax (Rule 6(2) of the STR, 1994). In any case, a non-designated bank will not accept service tax challans.
3.7. On what basis the payment of Service Tax is to be made i.e. whether for the billed amount or for the value received?
The Service Tax for a particular period is payable on the amount/value of taxable service received during that period and not on the gross amount billed to the client.
If the charges for the taxable service have been received in advance prior to rendering of the services, the Service Tax is payable even if the services are yet to be provided by them.
3.8. Can service tax be paid by cheque?
Yes, you can pay service tax be paid by cheque.
3.9. When paid by cheque, which date will be treated as date of payment?
The date of deposit of cheque is the date of payment of Service Tax. If the cheque is dishonoured, it would mean as if the Service Tax has not been paid and the relevant penal consequences would follow. (Rule 6(2) of the STR, 1994).
3.10. What is the interest rate applicable on delayed payment of Service Tax?
Every person, liable to pay the service tax in accordance with the provisions of section 68 or rules made there under, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest @13% per annum. Interest is payable for the period from the first day after the due date till the date of payment of any defaulted service Tax amount.
For further details please refer to Section 75 of the Finance Act, 1994.
3.11. Can interest be waived, and by whom?
Interest payments are mandatory in nature and cannot be waived in ordinary jurisdiction.
3.12. Whether Service Tax is payable after providing the service or after the receipt of the service charges?
Service Tax is payable on the amount received towards provision of a taxable service including any amount received in advance.
3.13. What is e-Payment of Service Tax?
e-Payment is a payment mode through which a Taxpayer can remit his tax dues to CBEC using Internet Banking Service. It is an additional facility being offered by the banks besides conventional procedure.
3.14. Whether e-Payment has been made mandatory?
Yes, the e-Payment of service tax has been mandatory with effect from 01.10.2006, for all assessees who has paid Rs 50 lakh or more in the preceding financial year or in the current financial year.
3.15. Are there any charges for availing e-Payment facility?
No, there are no charges for these services by any Bank.
3.16. Up to what time in a day the e-Payments can be made?
e-Payment can be made 24 hours a day using Internet banking service of Bank. Payment made up to 8 pm will be accounted on the same day. However payments effected after 8 pm will only be included in next working day's scroll by the Focal point Branch.
3.17. Does the Internet banking service give any receipt/confirmation for the e-Payment?
Yes, on successful payment the Internet banking user gets a Cyber Receipt for the Tax payment, which he can save or print for his record.
3.18. How does the taxpayer get the regular Challan stamped and receipted by Bank?
The concerned Focal Point Bank on the next working day will send the Challan copies duly receipted and stamped to the taxpayer by courier at the mailing address provided by the taxpayer.
Filing of Returns
4.1. What are the Returns a service tax assessee has to file?
ST-3 Return For all the registered assessee, including Input Service Distributors,
4.2. When to file returns?
ST-3 Return is required to be filed twice in a financial year half yearly. Return for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively.
4.3. How to file Service Tax Returns?
The details in respect of each month of the period for which the return is filed, should be furnished in the Form ST-3, separately. The instructions for filing return are mentioned in the Form itself. It should be accompanied by copies of all the GAR-7 (TR-6) Challans for payment of Service Tax during the relevant period.
4.4. Where can Service Tax Returns be filed?
ST-3 is filed in triplicate to the Superintendent of Central Excise/Service Tax with whom the assessee has registered himself.
4.5. Is filing of return compulsory even if no taxable service provided or received or no payments received during a period (a particular half year)?
Filing of return is compulsory, even if it may be a NIL return, within the prescribed time limit, failing which penal action is attracted.
4.6. Whether a single Return is sufficient when an assessee provides more than one service?
A single return is sufficient because the ST-3 Return is designed to capture details of each service.
4.7. Can we revise the Service Tax return?
Rule 7B of the rules prescribes that an assessee can submit a revised return with in 90 days(earlier 60 days) of filing of original return to rectify any mistake or omission.
Exemptions
5.1. What are the exemptions available for small service providers?
Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding Ten lakh Rupees (w.e.f. 1st April 2008) in any financial year i.e. 2008-09
The above mentioned exemption based on the turnover is not available to the persons who are liable to pay Service Tax but are not the service providers.
For example:
(1) The recipient of services from an overseas service provider who has no registered office in India
(2) A company incurring the Transportation charges for availing the services from Goods Transport Agencies, for transportation of goods by Road.
This exemption was introduced with effect from 01.04.2005. (Notifn.No.6/2005-ST dated 01.03.2005).
5.2. What is meant by the term aggregate value not exceeding Ten lakh rupees?
Aggregate value not exceeding Ten lakhs rupees means the sum total of first consecutive payments received during a financial year towards the gross amount, as prescribed under section 67 of the said Finance Act, charged by the service provider towards taxable services till the aggregate amount of such payments is equal to ten lakhs rupees but does not include payments received towards such gross amount which are exempt from whole of service tax leviable thereon under section 66 of the said Finance Act under any other notification.
5.3. What are the conditions for availment of the exemption from Service Tax by the small scale service providers?
Some of the important conditions for availment of the exemption are as follows:
5.4. Is the exemption for small scale service providers compulsory?
Service Tax assessees have the option not to avail the above exemption and pay Service Tax on the taxable services. However, such option once exercised in a financial year shall not be withdrawn during the remaining part of such financial year.
5.5. What are the other General exemptions available for Service Providers under Service Tax?
The following general exemptions from payment of whole of the amount of Service Tax are available for the Service Providers:
5.6. Whether the Service Tax should be charged or not, if the value of taxable service is up to Rs 10 Lakh?
Yes, the assessee should not charge the Service Tax if he/she is claiming the benefit of exemption. If by mistake such collections has been made the same should be refunded back to service receiver.
5.7. How the limit can be calculated in case of new Assessee or new services?
The basic exemption will also be available to new assessee as their previous years value of taxable services would be nil. Such assessee will have to foresee their turnover on the basis of experience and decide about opting for the exemptions by filing a declaration to the Central Excise Department.
5.8.Where a service provider provides different taxable services, whether the exemption limit of Rs. 10 lakh is computed for each service separately?
No, exemption limit of Rs.10 lakh shall apply to the aggregate value of all taxable services provided by the service provider.
5.9. Whether the aggregate value of taxable services will also include exempted services?
No, the exempted services provided by the service provider shall not be considered for counting value of taxable services. Only taxable services shall be considered after allowing for abatements/exemptions.
Penal Provisions
6.1. What are the penalties levied for failure to pay Service Tax under the Service Tax provisions?
Any person who is liable to pay service tax and fails to pay such tax, shall pay, in addition to such tax and the interest on that tax a penalty which shall not be less than two hundred rupees for every day during which such failure continues or at the rate of two per cent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax.
Provided that the total amount of the penalty payable in terms of this section shall not exceed the service tax payable.
X, an assessee, fails to pay service tax of Rs. 10 lakhs payable by 5th March. X pays the amount on 15th March. The default has continued for 10 days. The penalty payable by X is computed as follows:—
2% of the amount of default for 10 days = 2 x 10,00,000 x 10/31 = Rs. 6,451.61
Penalty calculated @ Rs. 200 per day for 10 days = Rs. 2,000
Penalty liable to be paid is Rs. 6,452.00.
6.2. What are the penal provisions for various contraventions of the Service Tax Law??
The Penal provisions for various contraventions of the Service Tax Law are as follows:
a) Non registration or delayed registration: An amount Rs. 1000/-could be imposed as penalty under section 77 of the Act.
b) Non-filing / delayed filing of returns: A mandatory penalty has been prescribed under Rule 7C of the Service Tax Rules, 1994, as well as an amount not exceeding One Thousand Rupees could be imposed as penalty under section 77 of the Act.
c) Suppression of the value of taxable services: Penalty to an extent ranging from 100% to 200% of the Service Tax which was not levied or paid or erroneously refunded, can be imposed on any person, if such short levy or short payment or erroneous refund is by reason of fraud collusion, willful mis-statement, suppression of facts; or contravention of the Act or the rules made thereunder with an intent to evade payment of Service Tax. Such liability towards penalty would be in addition to the Service Tax amount evaded or erroneously refunded and the interest thereon (Section 78 of the Act).
The above penalty can be reduced, if the Service Tax amount as determined by the competent authority is paid within 30 days from the date of communication of the order, along with interest, the amount of penalty liable to be paid shall only be 25% of the Service Tax amount so determined. The benefit of reduced penalty equivalent to 25% of the said Service Tax is available only if such lesser penalty amount is also paid within the aforesaid period.
d) Contravention of any of the provisions of the Act or the Rules made there under for which no provisions for penalty is available: An amount not exceeding Rs.1000/- is liable to be imposed as penalty under Sec.77 of the Act.
6.3. Why show cause notices are issued by the Service Tax Department?
When any amount is demanded as service tax or other dues from any person under the Finance Act, 1994 and rules made there under and/or any person is liable to penalty under the said Act/Rules, notices are issued in the interest of natural justice to enable such person to understand the charges and defend his case before an adjudicating officer.
6.4. Can show cause notice be waived?
Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him and inform the Central Excise Officer of such payment in writing. In such a case show cause notice will not be issued.
Relevant Forms
Click Here to download the following forms
For Registration under Service Tax
Form ST 1
For Service Tax Returns
Form ST 3
For Payment of Service Tax
Service tax GAR7