exemption

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14 December 2010 Is there any exemption to small scale service providers?

CA Sanat Pyne

CA Sanat Pyne (Expert)
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14 December 2010 Taxable services provided by the small scale service provider were exempted
from whole of service tax leviable there-on upto the aggregate taxable value Rs. 4 lakhs
in any financial year of vide Notification No.06/2005-ST dated 01.03.2005 (effective from
01.04.2005). The exemption limit of aggregate taxable was enhanced to Rs. 8 lakhs vide
Notification No.4/2007-ST dated 01.03.2007 (effective from 01.04.2007) and the same
has been further enhanced to Rs. 10 lakhs vide Notification No.8/ 2008-ST dated
01.03.2008 (effective from 01.04.2008).
(i) Above exemption is not admissible to :-
(a) taxable service provided by a person under a brand name or trade name,
whether registered or not, of another person or
(b) such value of taxable services in respect of which service tax shall be
paid by recipient of service under section 68 (2) of Finance Act read with
Service Tax Rules, 1994.
(ii) Above exemption is admissible subject to following conditions :-
(a) taxable service provider has the option not to avail the said exemption and
pay service tax on the taxable service and such option are exercised in a
financial year shall not be withdrawn during the remaining part of such
financial year ;
(b) the provider of taxable service shall not avail Cenvat credit of service tax
paid on any input used for providing taxable service on which exemption
of small scale is availed.
(c) The provider of taxable service shall not avail Cenvat credit under Rule 3
of the Cenvat Credit Rules 2004, during the period in which the service
provider avail small scale exemption.
(d) The provider taxable service shall avail CENVAT Credit only on such
inputs or input services received on or after the date on which the service
provider starts paying service tax and used for provision of taxable
services on which service tax is payable.
(e) The provider of taxable service shall be required to pay an amount
equivalent to the CENVAT credit taken by him, if any, in respect of such
inputs lying in stock or in process on the date on which he starts availing
exemption under this notification.

(f) The balance CENVAT Credit lying unutilized if any after the adjustment of
credit under
(e) above, shall lapse on the day such service provider starts availing the
exemption under this notification.
(g) This notification shall apply to the aggregate value of one or more taxable
services provided from one or more premises and not separately for each
premises or each service.
(h) The aggregate value of taxable services rendered by a provider of such
service from one or more premises does not exceed exemption limit fixed
(i.e. Rs.Ten lakhs) in the proceeding financial year.