Service Tax Act.

Service Tax Relating to Estate Agents
By Vimal Punmiya, Chartered Accountant

Posted on 10th July 2002
Introduction
With effect from 16th October, 98 the Finance Act, 1998 provides for levy of Service Tax @ 5% of the value of the taxable services provided by the following :
Real Estate agent including a real estate consultant :
Architects, Interior Decorator, Management Consultant, Practising Chartered Accountant/Cost Accountant/Company Secretary, Credit rating, Security Agency, Market Research Agency, Underwriter, Mechanised slaughter houses.
ASSESSEE
A person liable to pay the service tax and includes his agent.
Real Estate Agent
A “Real Estate Agent” means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant.
A “Real Estate Consultant” means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing acquisition or management, of real estate.
Thus a Real Estate Agent may also include the plantation companies who manage the estate of an investor for a consideration. Even Contractors who are paid supervision charges to look after the construction work of the building, plumbing consultants and electricians may also attract the levy of service Tax.
The activity of actual construction of any building carried out by Builders/ Developers does not attract service tax levy as it is not a service within the meaning of the term real estate agent or real estate consultant. It may be noted that some international realty concern, such as Richard Ellis, Colliers and Jardine etc. have opened shops in India and they are providing comprehensive realty services. Apart from the traditional services in respect of sale/purchase/leasing of real estate, such concerns are inter-alia, providing services to real estate developers and promoters in respect of evaluation of a proposed real estate scheme/project by conducting techno-economic studies, providing feasibility report s and by even helping in marketing real estate projects. Such services shall also attract Service Tax.

Registration
Every person liable to pay service tax, must apply for registration to the Asst. Commissioner, Service Tax cell, New Central Excise Building, 115, M.K. Road Mumbai-400020 in Form ST-I by the 16th of November, 1998. Where a person commences the business of providing a taxable service after 16th October, 98, he should apply within a period of 30 days from the date of such commencement.
Where an assessee is providing a taxable service from more than one premises or offices, he may opt for registering only the premises or office from where such centralised billing is done. However, if an assessee does not have a centralised billing system he is required to register all the premises or offices.
Where an assessee is providing more than on taxable service, he may make a single application, mentioning therein all the taxable services provided by him
Where a registered assessee transfers his business to another person, the transferee shall obtain a fresh certificate of registration. Every registered assessee, who ceases to provide the taxable service for which he is registered, shall surrender his registration certificate immediately.
Registration shall be granted in Form ST-2 within 7 days from the date of receipt of application. If the Registration Certificate is not granted within the said period the registration applied for shall be deemed to have been granted.
Records
Every assessee shall furnish to the Central Excise Officer at the time of filing his half yearly return for the first time a list of all accounts including computerised data as maintained by the asessee in relation to service tax including memoranda received from his branch offices.
Payment of Service Tax
Where the assessee is an individual/Proprietory/a Partnership firm
Services provided for the period Last Date for payment
1st April to 30th June 25th July
1st July to 30th September 25th October
1st October to 31st December 25th January
1st January to 31st March 25th April

Payment should be made in Form Tr-6 Challan into the specified Bank (Union Bank of India – 52 Branches or Dena Bank – 2 Branches).
In all other categories of service tax assessee’s the service tax shall be required to be paid by them by the 25th of the month immediately following the said calender month.
Where an assessee for any reason unable to correctly estimate on the date of deposit of the actual amount payable to any month/quarter, he may make a request in writing to the Central Excise Officer to make a provisional assessment of the tax on the basis of the amount deposited and the Central Excise Officer may on receipt of such request order provisional assessment of tax.
Where a request for provisional assessment has been made the assessee should file a statement giving details of the difference between the service tax deposited and the service tax liable to be paid for each month in Memorandum in Form ST 3A accompanying the half yearly Return.

Filing of Half yearly returns
All assessees under this Act are required to submit a half yearly Return in Form ST-3 i.e. by the 25th of October and by the 25th of April.

Interest on delayed payments of service tax
Any person who is liable to pay tax, fails to make payment he shall pay simple interest @ 1.5% for every month or part of the month bby which such crediting of the tax or part thereof is delayed.
PENALTY
NATURE OF OFFENCE PENALTY IN ADDITION TO SERVICE TAX DUE
1. Failure to pay Service Tax Penalty shall not be less than Rs. 100/- but may extend
to Rs. 200/- for every day during which such failure
continues maximum penalty : Amount of service tax that
the assessee failed to pay.

Failure to furnish prescribed A sum which shall not be less than Rs. 100/- but which
return may extend to Rs. 200/- for every week or part thereof
during which such failure continues.

Supressing value of taxable A sum which shall not be less than, the amount of service
service tax but which shall not exceed twice the amount of Service
Tax sought to be evaded.

N.B. Penalty cannot be imposed if the assessee proves that there was reasonable cause for the said failure.
MISCELLANEOUS
Facility for adjustment of excess payment of Service Tax.
Where the assessee has paid service tax in respect or taxable services which is not so provided by him either partially/wholly for any reason whatsoever, the assessee may adjust the excess service tax paid by him against his service tax liability for the subsequent period. The assessee must refund value of taxable services and the service tax thereon to the person from whom it was received. However, the assessee must filed details of such adjustments at the time of filing the Returns.
Payment of services tax on the amount received and not billed.
It frequently happens that the client pays an amounts less than that billed to them, on account of various reasons. Sometimes the final payment due is simply negotiated at a lesser amount than originally billed. In such cases where the amount received is less than the gross amount charged/billed to the client the service tax assessee should amend the bills either by rectifying the existing bills or by issuing a revised bill and by properly making such change in the billed amount. If the assessee fails to do so he shall pay service tax on the amount billed by him to the client for the services rendered.
Services which are outside the ambit of service tax
Services rendered in India in respect of overseas projects for which payment of service tax. This exemption is in respect of all the notified services under service tax legislation.

FORM ST-1
Application for Registration under section 69 of
Finance Act, 1994 (32 of 1994)

1. Name of the assessee :
2. Address of the assessee :
3. Address of the premises to be registered :
4. Category of the service :
5. Fax/Telex and Phone Number :
Form of Organisation (individual/company/
partnership,etc
Additional information required in the case
of stock broker.
(a) Name of the Member, with Code No. :
(b) Name of Stock Exchange registered with:
(c) Date of admission of membership :
(d) Whether member of more than one
Stock Exchange? If so, please give
name of the Stock Exchange with
Code Number :
Registration Number allotted by
Securities and Exchange Board of India
(copy of certificate of registration may
be enclosed or a copy of application
for registration with SEBi may be
enclosed) :
I/We ……………………………………………………………………………………………………………………… agree to abide by all the provisions of the Service Tax Rules, 1994 and any order issued thereunder.
I/We …………………………………………………………………………………………………………………… declare that to the best of my / our knowledge and belief the information furnished herein is true and complete.