With the service tax return season going on, consultants practising in the field of Indirect tax would be occupied in filing of Service tax return. The due date for filing of service tax return being 25 April; gives assessee a time of 25 days for preparing and filling the return. However, it is observed that maximum time, the consultants are initially occupied in filing of Excise and VAT return falling due in the month of April, ending up having a short time for preparing and filing of Service tax return.
With a short time span available in hand and at the same time with the approaching dead line, there is a possibility that one may inadvertently file erroneous return; which may subsequently lead to either incorrect disclosure or even rejection of return. In this article, I have tried to capture some of the common mistakes observed while filing of service tax return-
Errors observed while filing of service tax return – Incorrect disclosure
- Inserting wrong notification number for abatement/ exemption claimed
- Filing return under a service category not registered by the assessee in its service tax registration certificate
- Inserting details of services liable to tax under reverse charge under the head ‘Service provider’ instead of ‘Service Receiver’
- Showing net value of services provided instead of disclosing gross value and value of credit notes issued for non provision of service, deficiency in provision of service; separately in the return
- Non disclosure of exempt income
- Tax paid on receipt basis and liable to tax at lower rate i.e. 12.36% instead of 14% is inadvertently shown under tax rate of 14% by inversely calculating gross value of services provided. Eg: Value of service – Rs 10,000 and service tax thereon at 12.36% is - Rs 1,236. However the same is disclosed as Net value – Rs 8,823 (Calculating inversely to the amount of service tax to be paid) and service tax thereon at 14% - Rs 1,236 in the return
- Not selecting option under Rule 6(3) of CENVAT Credit Rules, 2004, in case where the same is applicable.
- Showing incomplete data in the return
Errors which might lead to rejection of return
- Using alphabet ‘O’ instead of zero or vice versa; while writing the assessee code number or challan number
- Providing wrong assessee code number
- Inserting values in decimals
- Inserting wrong challan numbers in the return (the return may not be rejected; however an error may be displayed on the face of return
There might be many reasons for making the above errors such as laziness to select proper option, poor knowledge of how to file a return, lack of time etc. However one needs to pay attention while filing of return as a return is a self declaration made by the assessee of its income earned and tax paid and incorrect disclosure therein might lead to tax and penalty implication thereon in future.
With this article, I have tried to cover maximum errors which one can make while filing of return; however the same is not in exhaustive in nature and following recommendations may be adopted to avoid such errors while filing the return-
- Prepare service tax workings on monthly or quarterly basis, to avoid any last minute hassle in preparing the return and also leaving sufficient time for preparing and filing of return
- Reconciling income as per books with income disclosed as per Form 26AS and income as per return, to ensure complete disclosure of values in the return
- Having a maker- checker concept to ensure return is reviewed before being uploaded online
- Going through the applicable exemption and abatement notification to avoid selecting any wrong notification number
- Adopt filing of return online instead of using an excel utility; on the last date of filing of return; as certain errors (errors which might lead to rejection of return) would be highlighted automatically by the system while filing the return online; giving an opportunity to the assessee for rectifying the same before submitting online.
The above recommendations may not take care of all the errors, however may surely reduce them to a large extent. It is advisable to be attentive while filing the return for the first time to avoid re-filling the same in case of rejection.
(The above views are author’s own views)