Payment of Service Tax

The due date of service tax payment 5th of the month following the month (6th in case of e-payment) in which payments are received toward value of taxable services [rule 6(1) of Service Tax Rules].
Thus, service tax is not payable on basis of amounts charged in the bills/invoice, but only on amounts actually
received during the relevant period.

Payment from Cenvat credit plus/GAR-7 – Assessee should first utilise Cenvat credit available. Balance amount is payable in cash.

Account code – The tax is payable by a GAR-7 Challan in the bank where excise duty is accepted in that
Commissionerate. The major account head is ‘044’. In addition, separate accounting code has been given to
each service. See next chapter pages for account head for each type of service. TR-6 challan (in yellow colour
in quadruplicate) is for payment in conventional mode while GAR-7 (one challan in yellow colour with counterfoil)
is used when Bank is having ‘EASIEST facility’. In both cases, payment is by cash or cheque. The tax paid should
be rounded off in rupees. Education cess and SAH education cess should be shown separately under separate
account head in TR-6/GAR-7 challan.

Presentation of cheque on or before due date is sufficient – Rule 6(2A) provides that cheque of proper amount should be deposited with bank on or before due date. It will be deemed to have been paid on due date, even if the cheque is realised later. However, if cheque is not realised, service tax will not be deemed to have been
paid.

If last date is a holiday – If last day of payment and filing return is a public holiday, tax can be paid and return can be submitted on next working day – CBE&C circular No. 63/12/2003-ST dated 14-10-2003.

Electronic Accounting System In Excise and Service Tax (EASIEST) – ‘Easiest’ has been developed to make
payment of tax easy. The facility is available with some 28 banks. The payment is made by GAR-7 challan.
Assessee has to make one copy of challan and its counterfoil.

Mandatory e-payment if annual service tax payment exceeds Rs.50 lakhs – e-payment is a mode of payment
in addition to the conventional methods of payment offered by the banks under specific security norms of
Reserve Bank of India. This scheme facilitates anytime, anywhere payment and an instant cyber receipt is
generated once the transaction is complete. It provides the convenience of making online payment of Central Excise and Service Tax through Bank’s Internet banking service. About 28 Banks are authorised for this purpose.
Proviso to rule 6(2) of Service Tax Rules makes e-payment mandatory for payment of duty by all assessees who
have paid Service tax of rupees 50 lakh or more in cash during the preceding financial year, w.e.f. 1-10-2006.

Mandatory interest for late payment of service tax – In case of delayed payment of service tax, there is
mandatory payment of simple interest under section 75 for the period which the payment is delayed. The
interest rate is 18% p.a. vide Notification No 14/2011 – Service Tax dt. 01.03.2011. Relief has been provided to
service providers who have an annual turnover not exceeding ` 60 lakhs, in that interest payable by item shall
be 15% p.a.

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