Tuesday 26 November 2013

Service Tax Amendments 2013

Being an Indian citizen, if you provide a taxable service, you would be liable for paying a certain amount of service tax to the government. Once you register under service tax, you would be called an assessee. Failing to pay your service tax returns on time could land you in major legal troubles. Even a slight mistake in paperwork can create problems for you. Service tax laws are complex and amendments are made every so often. You need to keep yourself updated with the recent changes so you can avoid the pitfalls.

According to a recent speech by the Finance Minister, there are around 17,00,000 registered assessees, but only around 7,00,000 individuals file their service tax returns. As far as these numbers suggest, more than half of the registered assessees have stopped filing their returns. It is not possible to go after each one of them. Instead of hunting them down, the government has taken a different approach. The Finance Ministry has taken steps to motivate tax defaulters to pay their due taxes.


To encourage tax defaulters to pay service tax, the government has introduced a one-time scheme called Voluntary Compliance Encouragement Scheme or VCES. Defaulters may take advantage of the scheme, provided they file truthful declaration of their service tax dues since 1st October, 2007 and make the payments in one or two installments within the deadline. If tax defaulters come forward and voluntarily file their due tax returns under the VCES scheme, they will not have to face the legal consequences that come with not paying taxes. Things like penalty, interest and other serious consequences will be waived. 


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