Service Tax - Filing of Return

Service tax is due and payable within 28 days after the taxable period of 2-month-cycle after the invoice has been paid off by client. For example, January to February's service tax is due and payable by 28th of March, March to April's service tax is due and payable by 28th of May.

Firstly, all invoices within the taxable period and with service tax payable are gathered and reconciled to the accounting records to ensure completeness. This step is to report to Customs Authority the total of invoice amount billed WITH service tax. I would recommend entering the invoice details such as issue date, invoice number, client name, amount of service subject to service tax, and service tax amount into a spreadsheet for easy referencing.


Then, check each transaction to find out its paid off date. For invoices issued in taxable period of January - February and invoice paid during February, mark down the paid off date (for instance, 20th Feb) at the last column of the specific transaction in the spreadsheet. This will allow you to identify which invoice's service tax is payable.

Thirdly, total up the amounts and reconcile against your accounting records. You should get a total amount of service tax for invoices issued during the taxable period agee to your service tax payable ledger, and the total service tax payable for all the invoices paid off during the taxable period agree to your debtors ledger.

Finally, fill up the return form obtained from Customs Authority and get Director's signature to approve the return. Cheque is then issued to Customs Authority for the amount payable.

One more additional step will required if the return is not furnished by 28th days after the taxable period, a 10% penalty will be charged to the total amount of service tax payable for every thirty days intervals, up to the maximum of 50%. For instance, if return is submitted after 28th March for Jan-Feb return, you will need to include a 10% penalty charge of the total amount payable. If the return submitted on 1st May (which is more than 30 days after 28th March), the penalty charge increased to 20% of the amount payable. This penalty can be increased up to a maximum of 50%.