shru project drycleaning

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IntroductionThere are two types of taxes, one is indirect tax and

another is direct tax.

Direct tax :Direct tax is levied on person. Examples of directtaxes are income tax and wealth tax. Income tax is atax on the income and wealth tax is a tax on thewealth of the person.

Indirect tax :Indirect tax is levied on goods and services. Theexample of indirect taxes are custom duty and servicetax, excise tax and sales tax, octroi duty etc. indirecttax is recovered from ultimate consumer. Indirect tax

is levied by government or central government.


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Service taxService tax was introduced in India for the first timein 1994- which began initially with only three services.The Chelliah committee pointed out that indirect taxat the central level should be broadly neutral inrelation to production and consumption of goods andshould, in the course of time, cover the commoditiesand services.

On the recommendation of the Chelliah committee, Dr.Manmohan Singh, then union Finance Minister in thisbudget speech for the year 1994-95 introduced the

concept of service tax and state that. There is nosound reason for exempting services from taxation,when goods are taxed and many countries treat goodsand services alike for tax purposes. The tax reformcommittee has also recommended imposition of tax onservices as a measures for broadening the base ofindirect taxes. I therefore purpose to make a modest

effort in this direction by imposing a tax on services oftelephones, non life insurance and stock brokers.


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It appears there are two reasons for the

introduction of service tax:

a)need for more revenue for the government asrevenue from excise and customs were decliningdue to WTO commitments to rationalize duties oncommodities. Hence, a need to explore alternative

revenue source.b)To introduce a principle of equivalence betweentax is a view that there is no distinction betweenconsumption of goods and services as both satisfyhuman need.

Explanation :

Service tax is a tax on a services. Service tax is not atax on a profession/trade but it is a tax an the serviceprovide in excise of the profession/trade. It is leviableonly if there is provision of service.


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Service taxService Tax is a form of indirect tax imposed on

specified services called taxable services. The

objective behind levying service tax is to reduce thedegree of intensity of taxation on manufacturing andtrade without forcing the government to compromiseon the revenue needs.

For the purpose of levying service tax, the value of

any taxable service should be the gross amountcharged by the service provider for the servicerendered by him.


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History of Service tax

Service Tax was first brought into force witheffect from 1 July 1994. All service providers in India,except those in the state of Jammu and Kashmir, arerequired to pay a Service Tax in India. Initially only

three services were broughtunder the net of servicetax and the tax rate was 5%. Gradually more servicescame under the ambit of Service Tax. The rate of taxwas increased from 5% to 8% w.e.f. 14 May 2003.

From 10 September 2004 the rate of Service Taxwas enhanced to 10% from 8%. Besides this 2%

education cess on the amount of Service Tax was alsointroduced.

In the Union Budget of India for the year 2006-2007, service tax was increased from 10% to 12%. OnFebruary 24, 2009 in order to give relief to theindustry reeling under the impact of economic

recession, The rate of Service Tax was reduced from12 %to 10 %


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Some of the major services that comeunder the Service Tax are:

y Telephoney Advertising agenciesy Courier agenciesy Air travel agentsy Management Consultantsy Practicing Company Secretariesy Photographyy

Dry cleaning servicesy Transport of goods through pipe line or

other conduit Servicey Cleaning Services


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Dry Cleaning Service

Definitions :

"Dry Cleaning" includes dry cleaning ofapparels, garments or other textile, fur or

leather articles, [Section 65 (37)]"Dry Cleaner" means any commercial concernproviding service in relation to dry cleaning,[Section 65 (38)]


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Taxable service:

Dry cleaning service provided by a dry cleaner

in relation to dry cleaning of apparels, garmentsor other textile, fur or leather articles.

Value of taxable service:

Gross amount charged for services of dry

cleaning.

Exemptions

y Wet cleaning/Washing provided the dry

cleaner clearly mentions it in the billy Dyeing, darning, ironing, repairs, in house

dry cleaning in hotels.

Person liable to pay: Dry cleaners


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Dry Cleaning is a way of cleaning clothes

without using water. But the process is not adry one, because liquid solvents are usedinstead. The solvents dissolve grease holding dirtand stains to the cloth. In this way, many kindsof stains can be removed that ordinary washingwill not remove. Dry cleaning does not shrinkclothes or make colors run. As it is not a hotcleaning process, it does not damage delicateand heat-sensitive fabrics.


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When you take clothes to be dry cleaned, any badstains are treated with special chemicals and the dirtyclothes are then placed in a large drum. The drum isfilled with cleaning fluid, which is often a chemicalderived from petroleum, and revolved. The fluid liftsthe dirt and stains from the garments. The dirty fluidis drained from the drum and the clothes rinsed inclean fluid. Then the clothes are whirled in acentrifuge to remove most of the remaining cleaningfluid, and finally tumbled in a current of warm air toevaporate any fluid that is left and to remove its odor.Any remaining stains are removed by hand, usingspecial stain removers, and the garments are thenpressed by steam presses.


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Symbols


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Form ST 1

[Application form for registration under Section 69 of the

Finance Act, 1994 (32 of 1994)]

(Please tick appropriate box below)

New Registration

Amendments to information declared by the existing Registrant.

Registration Number in case of existing Registrant seeking Amendment ____________

1. (a) Name of applicant

(b) Address of the applicant

2. Details of Permanent Account Number (PAN) of the applicant

(a) Whether PAN has been issued by the Income Tax Department

YES NO

(b) If Yes, the PAN

(C) Name of the applicant (as appearing in PAN)

3. (a) Constitution of applicant (Tick as applicable)

(i) Proprietorship

(ii) Partnership

(iii) Registered Public Limited Company

(iv) Registered Private Limited Company

(v) Registered Trust

(vi) Society/Cooperative society

(vii) Others

(b) Name, Address and Phone Number of Proprietor/Partner/Director


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(i) Name

(ii) Address

(iii) Phone Number

4. Category of Registrant (Please tick appropriate box)

(a) Person liable to pay service tax

(i) Service provider

(ii) Service recipient

(b) Other person/class of persons

(i) Input service distributor

(ii)Any provider of taxable service whose aggregate value of taxable service

in a financial year exceeds three lakh rupees

5. (a) Nature of Registration (Tick as applicable)

(i) Registration of a single premise

(ii) Centralized Registration for more than one premises

(b) Address of Premises for which Registration is sought

(i) Name of Premises / Building

(ii) Flat/Door/Block No.

(iii) Road/Street/Lane

(iv) Village / Area / Lane

(v) Block/Taluk/Sub-Division/Town


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(vi) Post Office

(vii) City/District

(viii) State/Union Territory

(ix) PIN

(x) Telephone Nos.:

(xi) Fax No.

(xii) E-mail Address

(c) In case of application for Centralized Registration, furnish address of all the premises from

where taxable services are provided or intended to be provided (FORMAT AS PER 5(b)

ABOVE)

(d) In case of application for Input Service Distributor, furnish address of all the premises to

which credit of input services is distributed or intended to be distributed (FORMAT AS PER

5(b) ABOVE)

6.Address of the premises or office paying service tax under centralised billing or centralised

accounting under sub-rule (2) and (3A) of rule 4 of the Service Tax Rules, 1994.

Address

7. Description of taxable services provided or to be provided by applicant

S.No. Description of service Relevant clause of section 65 of the Finance Act,

1994, to be indicated, if possible

(1) (2) (3)

8. Name, Designation and Address of the Authorized Signatory /Signatories:


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DECLARATION

I, ___________________________________________hereby declare that the information given inthis application form is true, correct and complete in every respect and that I am authorized to sign on

behalf of the Registrant.

(a) For new Registration:

I would like to receive the Registration Certificate by mail / by hand/ E-MAIL

(b) For amendments to information pertaining to existing Registrant:

Date from which amendments are made: _______________

(Original existing Registration Certificate is required to be enclosed)

[Self certified photocopy of Registration Certificate by mail / by hand/ e-mail]

(Signature of the applicant/authorized

person with stamp)

Date:

Place:

ACKNOWLEDGEMENT

(To be given in the event Registration Certificate is not issuedat the time of receipt of application for Registration)

I hereby acknowledge the receipt of your Application Form

(a) For new Registration

(As desired, the New Registration Certificate will be sent by E-MAIL/ mail/handed over to you

in person on______________)

(b) For amendments to information in existing Registration

(I hereby acknowledge receipt of original existing Registration Certificate)

Signature of the Officer of Central Excise

(with Name & Official Seal)

Date:


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_FORM ST-2

[Certificate of registration under Section 69 of

The Finance Act, 1994 (32 of 1994)]

Shri/Ms. . (name with complete address of premises ) havingundertaken to comply with the conditions prescribed in Chapter V of the Finance Act, 1994 read with the

Service Tax Rules, 1994, and any orders issued thereunder is hereby certified to have been registered

with the Central Excise Department. The Service Tax Code and other details are mentioned hereunder.

1. PAN No.

2. Service Tax Code

3. Taxable Services

4. Address of business premises:

(i) Name of Premises / Building

(ii) Flat/Door/Block No.

(iii) Road/Street/Lane

(iv) Village / Area / Lane

(v) Block/Taluk/Sub-Division/Town

(vi) Post office

(vii) City/District

(viii) State/Union Territory


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(ix) PIN Telephone Nos:

X

(x) E-mail Address

5. PREMISES CODE

[SL.NOS.2,3,4 TO BE REPEATED FOR EVERY PREMISES BEING GRANTED A

REGISTRATION UNDER THIS CERTIFICATE. PREMISES CODE IS GIVEN BY THE

DEPARTMENT BASED ON THE COMMISSIONERATE+DIVISION+ RANGE+ SL NO]

6.

This certificate is issued incorporating the changes intimated by the applicant and the

previous certificate of registration bearing Registration Number __________ issued on_________ stand cancelled.

Note:1. In case the registrant starts providing any other taxable service (other than those

mentioned above), he shall intimate the department.

2. In case the registrant starts billing from other premises (other than those mentioned

above), he shall intimate the department.

3. These intimations and any other information which registrant wishes to bring to the notice

of the department can be submitted on-line by the registrant after logging on to web-site.

4. This registration certificate is not transferable.

5. List of Accounting Codes is enclosed. These may invariably be furnished in the challan at

the time of making payment of service tax.

Place: . Name and signature of the Central Excise

Date: . Officer with official sea

CC: (by e-mail) To-

(1) The Pay and Accounts Officer (Commissionerate Name)

(2) The Superintendent of Central Excise (Where premises are located).

__


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Calculation of Service tax

Shall I pay service tax on billed amount or amounts actually received?

How are you paying service tax? On billed amount or on receipt?Many are paying service tax on billed amount and unaware of the

concept tax payment on amount actual received. There is no problem

paying service tax on billed amount. But this is not the correct way for

the payment of service tax. A service provider is liable to pay service

tax only when he receives the consideration for his service. Thinking

practically it is not fair paying service tax on service provided; that has

never received payment. I will explain this with an example.

ABC Ltd billed Rs 500000.00 (Inclusive of service tax) on 1st

May 2009.Payment received Rs 300000.00 on 14th July and Rs 200000.00 on

25th August.

From the above example lets find out the service tax liability on each

month.

Date Billamount

Paymentreceived

Taxliability

Servicetax payment date

without interest.

01/05/2009 500000.00 0 0 0

14/07/2009 0 300000.00 28014.00 05/08/2009

25/08/2009 0 200000.00 18677.00 05/09/2009

However there is an exception for this clause. Transaction between

associated enterprises; service tax is payable even if the consideration

for service provided is received or not. The service tax is payable

immediately after debiting /crediting in the books of account.


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How do we find out the tax liability on partly received payments?

From the above example Rs 500000.00 is inclusive of service tax. This

means ABC LTD charged a gross amount of Rs 453309.00. And a service

tax Rs 46691 in their service bill.

How do you calculate tax liability when you receive a part payment?

Here you are getting RS 300000.00 as a part payment. So our liability is

calculated by making back calculation on Rs 300000.00 use the following

formula.

Since tax liability is on amount received; shall I liable to pay service taxon advance received?

Yes, any advance received is immediately taxable even if the service is

provided later.

Advance received but service is not provided due to some reason, isservice tax refundable?

Yes, the service tax paid in advance shall be refunded as service tax notpayable on service not provided.


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I am a new service provider, my service crossed Rs 10 Lac this year.Shall I pay service tax on total amount of service provided during theyear or Service provided after ten Lac?

Your service is taxable only when it crosses 10 Lac limit. But the liabilityis on only amount after 10 Lac make it more clear refer below chart of

ABC Ltd started a new business from 1st April 2009

Date BillNo

BillAmount

PaymentRecd

Registration TaxLiability

01/04/2009 1001 250000.00 250000.00 No 0

28/08/2009 1002 450000.00 450000.00 No 0

01/01/2010 1003 210000.00 210000.00 Yes ( Totalamountreceivedcrosses Rs9Lac)

0

31/03/2010 1004 250000.00 250000.00 Al readyregistered

Rs160000 [email protected]%

In the above example Rs 160000.00 is chargeable to tax @10.3% in bill no

1004.

In the above example ABC LTD service is taxable from the 1st day April

in the nextfinancial year 2010-11. As last year; their service crossed the

limit Rs 10 Lac and started paying tax.


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How to find out the Service tax liability if tax is not collected fromcustomer?

It is the liability of the service provider to pay service tax even if tax is not

collected from client. In such cases total bill amount is considered as inclusive of

tax and liability is ascertained by making back calculation

To find out value of taxable service use the following formula

You can calculate service tax liability from the value of taxable service or

assessable amount.

For example you have billed Rs. 100000.00 and no tax is collected from customer

your taxable amount and service tax is calculated as follows

I cannot assess the service tax liability for a particular month orQuarter. In such situation; how to pay service tax?

If you cannot assess the service tax liability for a particular month or quarter for

some reasons, you can pay service tax on provisional basis by giving a request to

Assistant/Deputy commissioner of central excise in writing .after getting such

request the concerned authority may let you pay tax on provisional basis. Such

assessee has to file memorandum in Form ST3A showing the details of

actual service tax deposited and actual service tax liability of each month or

quarter.


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ACKNOWLEDGEMENT

We would like to thanks ourPROF. SAMIDHA MAMforgiving us such a nice project onSERVICE TAX

(DRYCLEANING), which will definitely help us in our future,in this corporate world.

A GOOD TEACHER IS OF MORE USE THAN AHUNDRED PRIESTS!

We glad to have such a nice teacher to KICK us safely at theRIGHTPLACE.

Similarly, thanks to our group for maintaining co-operation &co-ordination.


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INDEX

Introduction

Definition

Dry cleaning

Forms for registration

Calculation of Service tax

Conclusion

Bibliography


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CONCLUSION

We have learnt that, Service Tax is a form of indirecttax imposed on specified services called taxableservices. The objective behind levying service tax is toreduce the degree of intensity of taxation onmanufacturing and trade without forcing thegovernment to compromise on the revenue needs.

The purpose of levying service tax, the value of anytaxable service should be the gross amount charged bythe service provider for the service rendered by him.


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BIBLIOGRAPHY

y Indirect taxation (sem iv)

y www.wikipedia.com


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SERVICE TAX

(DRY CLEANING)

Class :S.Y.A.F.

Submitted by :

Sangeeta Hire 72505

Juanita James 72508

Shruti Tawde 72510

Beena Chetwani 72535

VandanaP

awar72539

Anil Meel 72542

Submitted to :

PROF. SAMIDHA MAM


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shru project drycleaning

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