• Improper paperwork can result in a penalty under the Service Tax Act.india flag icon. (with clipping path) image by Andrey Zyk from Fotolia.com
  
  India's Service Tax Act has been in effect since 1994. Service taxes are charged in return for services provided by qualified professionals. As with all things involving taxes, there are penalties involved if the taxes are not paid on time and in full. These penalties, determined by the Central Excise Office, include the partial or total repayment of the service tax. Late and fraudulent payments are the two most serious infractions.
  
  

Penalties for Failure to Pay

• When the service tax is not paid on time, a very strict formula determines the amount of money to be repaid. Once the payment date has come and gone without the service tax and its accumulated interest being paid in full, a penalty is added onto the money already owed. At minimum, this penalty is 200 rupees every day or a rate of 2 percent of the tax a month until the tax is paid off. The payment plan that requires the delinquent to pay the most amount of money is the method chosen. This penalty continues to be added up from the day the service tax payment was due until the final payment is made. The penalty is only capped off when the penalty payment exceeds the amount of the service tax payable.
  
  

Penalties for Fraudulent Payments

• The amount of service taxes paid is calculated in terms of the amount charged for the professional service. A penalty is incurred if payment has been made on a service tax that's value has been fraudulently listed. After the false service tax has been paid in any amount or a refund has been given, the person who made the false payment is subject to a penalty. This includes payments of service taxes that were determined by means of fraud, collusion, a willful miss-statement or the suppression of facts. Attempting to make a fraudulent service tax payment ultimately costs not only the entire cost of the original tax and all its interest but a penalty amounting to twice the original service tax.
  
  

Uncategorized Penalties

• The Central Excise Office is the body that deals with service tax payments and officers of that body are able to give out penalties to those who do not meet certain demands. Individuals who do not hand over information or produce documents required by a Central Excise Officer face a penalty of up to five thousand rupees or two hundred rupees a day from the time of non-compliance until all requirements are met. The same penalty is given to those who fail to appear before a Central Excise Officer when called to give information or present documents for an investigation. People who fail to register payment of a service tax, create invoices with incorrect information or fail to keep account of serviceable taxes are also penalized. Finally, those who are required to make service tax payments electronically and then do not are penalized up to five thousand rupees.