03 December 2012
Whether EXEMPT SERVICES & NOT A NON-TAXABLE SERVICES exempted by way of notification or otherwise shall be included while calculating limit of Rs. 9 lac for registration of taxable service provider?
29 July 2024
In the context of Service Tax (now GST) and its regulations, the treatment of exempt services for the purpose of calculating the registration threshold can be quite nuanced. Here’s how it works:
### **Understanding the Registration Threshold**
Under Service Tax (pre-GST era), the threshold limit for mandatory registration was ₹10 lakhs (which was later raised to ₹20 lakhs). For services beyond this threshold, registration was mandatory. The following points clarify how exempt services impact the registration threshold:
1. **Definition of Taxable Services:** - **Taxable Services** include services on which service tax is levied. Exempt services are generally those that are exempt from service tax by way of specific notifications or legislative provisions. - **Exempt Services** are not subject to service tax and are typically included in the list of services that are explicitly exempted by notifications issued by the government.
2. **Threshold Calculation:** - When calculating the aggregate turnover for determining whether you exceed the registration threshold limit, **only taxable services** are considered. The revenue from exempt services is not included in this threshold calculation. - **Exempt services** are not counted in the ₹10 lakh or ₹20 lakh limit for compulsory registration. This is because these services are not subject to service tax, and therefore, their revenue does not contribute to the taxable turnover.
3. **Implications for Registration:** - If your total turnover from **taxable services** crosses the threshold limit (e.g., ₹10 lakhs or ₹20 lakhs), you are required to obtain service tax registration, regardless of the revenue from exempt services. - Revenue from exempt services does not need to be considered for the threshold limit calculation. However, if you are providing both taxable and exempt services, you still need to calculate your total taxable turnover for determining whether you need to register.
### **For GST Regime (Post-July 2017):**
With the implementation of GST, the rules have changed:
1. **Threshold Limit under GST:** - The threshold limit for registration under GST is ₹20 lakhs (₹10 lakhs for special category states). - For GST, the aggregate turnover includes all supplies made by a business, including exempt supplies.
2. **Inclusion of Exempt Services in Aggregate Turnover:** - Under GST, the term "aggregate turnover" includes the value of all taxable supplies, exempt supplies, exports of goods or services, and inter-state supplies. - Hence, even exempt services are included in the aggregate turnover for determining registration requirements.
### **Summary:**
- **Under Service Tax (pre-GST):** Exempt services are **not included** when calculating the ₹10 lakh or ₹20 lakh threshold for mandatory registration. - **Under GST (post-July 2017):** Exempt services **are included** in the aggregate turnover calculation for determining the registration threshold.
If you are referring to the Service Tax regime, you should exclude exempt services from the calculation of the threshold limit. However, under the GST regime, you need to include all supplies, including exempt services, in your aggregate turnover calculation.
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