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The Service Tax Voluntary Compliance Encouragement Scheme

28 May 2013

Aiming to incentivise persons to pay service tax dues owed to the exchequer, a onetime amnesty scheme called the Service Tax Voluntary Compliance Encouragement Scheme 2013 was introduced as part of the Union Budget proposals for 2013-14. Taxand India discusses the main features of the Scheme.

The Scheme has been introduced to incentivise defaulting persons to voluntarily declare tax dues for the period 1 October 2007 to 31 December 2012. This declaration is to be filed in a prescribed form, on or before 31 December 2013.

The declaration cannot be filed in relation to the following service tax dues:

  • Dues in relation to which a notice or an order of tax determination has been passed before 1 March 2013 under Section 72, Section 73 or Section 73A of Chapter V of the Act
  • Dues in relation to periods for which the declarant has furnished returns and disclosed the true liability but has not actually paid the disclosed amount of tax or any part thereof
  • Dues in relation to any issue in respect of which a notice or an order of determination has been issued for any prior period

The designated authority shall, for reasons to be recorded in writing, reject the declaration in relation to any tax due:
Where an enquiry or investigation has been initiated in relation to such dues by way of search of premises under Section 82 of the Act, issuance of summons under Section 14 of the Central Excise Act or accounts, documents and other evidence has been requisitioned in relation to such enquiry or investigation

  • Where an audit has been initiated and such enquiry, investigation or audit is pending as on 1 March 2013

Upon receipt of the declaration filed by the declarant, it is incumbent upon the designated authority to acknowledge the declaration within a period of 7 working days from the date of receipt of the declaration. Upon such acknowledgement, the declarant is required to pay the tax dues on a staggered basis with at least 50% of the dues being paid before 31 December 2013 and the remaining dues being paid in 2014.

Discover more: The mechanics of the Service Tax Voluntary Compliance Encouragement Scheme

Your Taxand contact for further queries is:
Gokul Chaudhri
T. +91 124 339 5040

Taxand's Take

While the Scheme came into force with the enactment of the Finance Bill 2013, it is now sought to be implemented through the Service Tax Voluntary Compliance Encouragement Rules 2013. Taxpayers should note that upon acceptance of their declaration of choice, while they would be required to pay the taxes due, an immunity is granted from the levy of interest, penalty and any other proceedings under Chapter V of the Finance Act 1994.

Taxand's Take Author