The Finance Minister, Mr. Arun Jaitley, had brought in a proposal during the Union Budget 2016 to impose the Krishi Kalyan Cess on all taxable services. The recommended amount was at the rate of 0.5%, which would put the effective service tax rate at 15%.
Calculation of Service Tax
From the 1st of June 2016, service tax is levied at 15% of the value of taxable services under Section 66 of the Service Tax Act. The 15% includes 0.5% Krishi Kalyan Cess and 0.5% Swach Bharat Cess.
Documents Required for New Service Tax Registration
All the documents required for service tax registration must be self-attested copies. The address on the individual’s Driving License/Voter ID Card/Aadhar Card will not usually be the same as the address of the business, so copies of utility bills can be used as proof of business address as they are accepted by State Service Tax departments. The PAN Card is compulsory for the legal entity or proprietor.
Following are the documents you will need for service tax registration:
- PAN Card copy of the Legal Entity or the Proprietor registered.
- Identity proof and a photograph of the individual filing the application (ID proof documents can be PAN Card, Voter ID Card, Driving License, Passport, Aadhar Card, or any other photo ID card availed from a Public Sector Undertaking, State Government, or Central Government.
- Details of the primary bank account.
- Authorisation by the Proprietor/Partners/Board of Directors for the individual filing the application.
- List of Directors/Articles/Memorandum of Association
- Rent or lease agreement, proof of ownership, No Objection letter from the Legal Owner, or allotment letter from the government for establishing possession of the premises to be registered.
- Business Transaction Numbers attained from other agencies or government departments, like Company Index Number, Central Sales Tax Number, State Sales Tax Number, Import Export Code, Customs Registration Number, which were issued before the Service Tax Registration application was filed.
Following are the documents you will need for service tax registration for Private Limited Companies:
- Articles/Memorandum of Association.
- Board Resolution with regard to authorization of any of the company’s directors to deal/sign/comply with a provision of the rules and regulations associated with the service tax.
- List of Directors along with their address and identity proof.
Following are the documents you will need for service tax registration for Partnership Firms:
- Copy of the Partnership Deed.
- The address and identity proofs of all partners.
- Business Transaction Numbers attained from other agencies or government departments like Central Sales Tax Number and State Sales Tax Number that were issued before the Service Tax Registration application was filed.
Impact of the Service Tax Hike:
With the implementation of the service tax hike, consumers would see a noticeable increase in their bill amounts when they purchase electronic equipment, AC railway tickets, cars, houses and movie tickets. Banking transactions, phone bills, internet bills, credit card bills, dining bills and health care services will become costlier with the imposition of the new tax.
Manufacturers will be able to find some reprieve from the Krishi Kalyan Cess as it will be slightly lower for them. They will have rebates for cess paid on goods that are imported.
Goods and services purchased for any value more than Rs. 2 lakhs would attract a 1% tax at source. This does not include jewellery purchases. Cars costing above Rs. 10 lakhs would also carry a luxury tax of 1%.
