Mandatory E-Payment of Excise Duty and Service Tax Reduced to Rs.1 lakh w.e.f. 1st January, 2014

Reduction in Threshold Limit for Mandatory E-Payment of Central Excise Duty and Service Tax.

It has now been decided to reduce the threshold limit of mandatory e- payment from rupees ten lakhs to rupees one lakh for both Central Excise and Service Tax payment with effect from 1st of January, 2014. Notification no. 15/2013-C.E. ( N.T.) dtd 22.11.13 and 16/2013- Service Tax dtd 22.11.13 have been issued by the government to notify these changes. Thus, from 1st of January, 2014, a manufacturer or a Service Tax payer who has paid a duty or tax of more than rupees one lakh in the previous financial year shall be required to pay duty or tax through internet banking.

Mandatory e-payment of service tax and excise duty

 This step has been taken as measure of trade facilitation and it is expected that increased coverage of e-payment would make it convenient for the trade to pay taxes electronically.

Currently, a manufacturer is required to pay duty of Central Excise through internet banking (i.e. e- payment) if the total duty paid by the manufacturer exceeds rupees ten lakhs in the previous financial year as per rule 8 of the Central Excise Rules, 2002.

A Service provider is also required to pay Service Tax through internet banking (i.e. e-payment) if the total tax paid by the Service provider exceeds rupees ten lakhs in the previous financial year as per rule 6 of the Service Tax Rules, 1994.

Penalty for non payment of electronic payment of Service tax

Non-Payment of tax through elctronic made attracts penalty which may be extend upto Rs.10,000 under section 77(1)(d) w.e.f 08.04.11 (earlier it was Rs.5,000).

Other Points:

  1. Both CENVAT Credit as well as amount paid by challan is required to be summed up for threshold limit. For eg. A person is required to make e-payment if he has claimed Rs 80,000/- as Cenvat credit and paid Rs 40,000 as Service tax by challan in FY 2012-13, w.e.f 01.01.14 as total tax paid for previous  financial year i.e F.Y. 2012-13 (cenvat credit taken plus challan amount paid  = 80000+40000 =Rs 1,200,00/-) is more than one lakh .
  2. Threshold Limit of Rs.1 lakh (earlier Rs.10 lakh) needed to be checked financial year wise.
  3. Since this rule talks about previous financial year data thus does not applicable in first year of business.

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