Is service tax registration required for providing one time large service
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 October 2015
A client is running a foreign language coaching center. He is not registered for service tax since his his annual turnover does not increase Rs. 10 lakh. He is planning to take his students on a foreign tour. For this purpose, he is collecting Rs 20 lakh from his students. The total expenses of the trip is estimated to be Rs. 16 lakh
From income tax angle I done see any problem as he can pay tax on this profit of 4 lakh
What is the service tax implication to this. Will he be required to take a service tax registration? If yes, how much service tax will he be required to pay?
From income tax angle I done see any problem as he can pay tax on this profit of 4 lakh
What is the service tax implication to this. Will he be required to take a service tax registration? If yes, how much service tax will he be required to pay?
14 October 2015
your client will cross the threshold limit of Rs. 10 lacks,registration is required and service tax will be payable on the gross receipt.
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 October 2015
But Prabhat. Will not entry 8 of mega exemption notification apply.
"Services by way of training or coaching in recreational activities relating to arts, culture or sports"
Will foreign language class not be includable as it is related to culture?
"Services by way of training or coaching in recreational activities relating to arts, culture or sports"
Will foreign language class not be includable as it is related to culture?
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 October 2015
But Prabhat. Will not entry 8 of mega exemption notification apply.
"Services by way of training or coaching in recreational activities relating to arts, culture or sports"
Will foreign language class not be includable as it is related to culture?
"Services by way of training or coaching in recreational activities relating to arts, culture or sports"
Will foreign language class not be includable as it is related to culture?
01 August 2024
For the situation you described, here are the key considerations for Service Tax and GST implications:
### 1. **Service Tax Registration Requirement**
- **Threshold Limit**: Under the Service Tax regime (pre-GST), a service provider was required to obtain registration if their aggregate turnover exceeded Rs. 10 lakh in a financial year. Since your client’s annual turnover does not exceed this limit, they were not required to obtain Service Tax registration under the old regime.
- **One-Time Large Service**: Even if the client’s annual turnover is below the threshold limit, if they are providing a one-time large service (such as organizing a foreign tour and collecting Rs. 20 lakh), they might still need to obtain Service Tax registration if the value of the service provided exceeds Rs. 10 lakh. The key consideration is whether the turnover from the specific service exceeds the threshold limit.
### 2. **Service Tax on Foreign Tours**
- **Service Tax Applicability**: If the service provided (organizing a foreign tour) falls under taxable services and if the total amount collected exceeds Rs. 10 lakh, Service Tax would be applicable on the amount received. The applicable rate would depend on the specific nature of the service and the tax laws at that time.
- **Exemption Notification**: Under the Service Tax regime, Notification No. 25/2012-ST dated June 20, 2012, provided exemptions for certain services. However, this specific exemption for “services by way of training or coaching in recreational activities relating to arts, culture, or sports” (Entry 8) typically would not apply to foreign language classes unless they were specifically classified under cultural or recreational activities. Foreign language classes generally fall under educational services, which may not be covered by this particular exemption.
### 3. **GST Considerations (Post-July 1, 2017)**
- **GST Registration**: Under GST, the threshold for mandatory registration is Rs. 20 lakh (Rs. 10 lakh for special category states). If your client’s turnover for the specific service (organizing the tour) exceeds this threshold, GST registration would be required.
- **GST on Services**: Under GST, the service of organizing a tour would be subject to GST, and the applicable rate would depend on the nature of the tour and services provided. For tours and travel services, the rate might be around 5% or 18% depending on the specifics.
- **Exemptions**: While certain educational services might be exempt from GST, organizing a foreign tour is generally not covered under exemptions related to educational services.
### Summary:
1. **Service Tax (Pre-GST)**: If the service provided exceeds Rs. 10 lakh, Service Tax registration would have been required, and Service Tax would be applicable on the amount received.
2. **GST (Post-July 1, 2017)**: GST registration is required if the turnover exceeds Rs. 20 lakh, and GST would be applicable on the service provided.
3. **Exemption Notifications**: The exemption under Entry 8 of the Mega Exemption Notification likely does not apply to foreign language coaching or organizing foreign tours.
It's crucial to consult with a tax professional or legal advisor to ensure compliance with current regulations and accurate filing for both Service Tax (if applicable) and GST.
### 1. **Service Tax Registration Requirement**
- **Threshold Limit**: Under the Service Tax regime (pre-GST), a service provider was required to obtain registration if their aggregate turnover exceeded Rs. 10 lakh in a financial year. Since your client’s annual turnover does not exceed this limit, they were not required to obtain Service Tax registration under the old regime.
- **One-Time Large Service**: Even if the client’s annual turnover is below the threshold limit, if they are providing a one-time large service (such as organizing a foreign tour and collecting Rs. 20 lakh), they might still need to obtain Service Tax registration if the value of the service provided exceeds Rs. 10 lakh. The key consideration is whether the turnover from the specific service exceeds the threshold limit.
### 2. **Service Tax on Foreign Tours**
- **Service Tax Applicability**: If the service provided (organizing a foreign tour) falls under taxable services and if the total amount collected exceeds Rs. 10 lakh, Service Tax would be applicable on the amount received. The applicable rate would depend on the specific nature of the service and the tax laws at that time.
- **Exemption Notification**: Under the Service Tax regime, Notification No. 25/2012-ST dated June 20, 2012, provided exemptions for certain services. However, this specific exemption for “services by way of training or coaching in recreational activities relating to arts, culture, or sports” (Entry 8) typically would not apply to foreign language classes unless they were specifically classified under cultural or recreational activities. Foreign language classes generally fall under educational services, which may not be covered by this particular exemption.
### 3. **GST Considerations (Post-July 1, 2017)**
- **GST Registration**: Under GST, the threshold for mandatory registration is Rs. 20 lakh (Rs. 10 lakh for special category states). If your client’s turnover for the specific service (organizing the tour) exceeds this threshold, GST registration would be required.
- **GST on Services**: Under GST, the service of organizing a tour would be subject to GST, and the applicable rate would depend on the nature of the tour and services provided. For tours and travel services, the rate might be around 5% or 18% depending on the specifics.
- **Exemptions**: While certain educational services might be exempt from GST, organizing a foreign tour is generally not covered under exemptions related to educational services.
### Summary:
1. **Service Tax (Pre-GST)**: If the service provided exceeds Rs. 10 lakh, Service Tax registration would have been required, and Service Tax would be applicable on the amount received.
2. **GST (Post-July 1, 2017)**: GST registration is required if the turnover exceeds Rs. 20 lakh, and GST would be applicable on the service provided.
3. **Exemption Notifications**: The exemption under Entry 8 of the Mega Exemption Notification likely does not apply to foreign language coaching or organizing foreign tours.
It's crucial to consult with a tax professional or legal advisor to ensure compliance with current regulations and accurate filing for both Service Tax (if applicable) and GST.
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