Tax liability
This query is : Resolved
12 May 2016
Dear All,
Suppose Mr X Doing Guest House Business under name of ABC Suite. Date of Registration 25-09-2015. Turnover in first half (25-09-2015 to 30-09-2015) was Rs 523400/- and for 2nd half Rs 1408000/- i:e total Rs 1931400/-. Assessee file ST 3 of both half on nil basis. Now in april wanted to shut down the business.
My question:
1. Whether assessee covered under 26/2012 entry number 6 (Assessee is not covered under entry number 18 of Mega exemption entry number 18).
2. Taxable Amount
(a) Rs 931400/- (Rs 1931400/- - Rs 1000000/-) (i:e will not covered in any notification
(b) Rs 558840/- (60% of Rs 931400/-) (covered under 26/2012 + SSP Exemption of First 10 Lakh )
(c) Rs 1158840/- (60% of Rs 1931400/-)
Suppose Mr X Doing Guest House Business under name of ABC Suite. Date of Registration 25-09-2015. Turnover in first half (25-09-2015 to 30-09-2015) was Rs 523400/- and for 2nd half Rs 1408000/- i:e total Rs 1931400/-. Assessee file ST 3 of both half on nil basis. Now in april wanted to shut down the business.
My question:
1. Whether assessee covered under 26/2012 entry number 6 (Assessee is not covered under entry number 18 of Mega exemption entry number 18).
2. Taxable Amount
(a) Rs 931400/- (Rs 1931400/- - Rs 1000000/-) (i:e will not covered in any notification
(b) Rs 558840/- (60% of Rs 931400/-) (covered under 26/2012 + SSP Exemption of First 10 Lakh )
(c) Rs 1158840/- (60% of Rs 1931400/-)
14 May 2016
Dear Saurav,
Most people are under the mistaken assumption that it is the taxable turnover that is to be computed under various services in computing the threshold limit of Rs.10 lakhs.
In the first instance, all that has to be done is to identify whether a particular turnover is taxable turnover or not. If the turnover is taxable then whether it exceeds Rs.10 lakhs or not. All taxable services are subject to duty at the rate of Service Tax 14%, Swatch Bharat Cess 0.5% and Krishi Kalyan Cess (w.ef.1st June 2016) 0.5%. Irrespective of what the service providers tax invoice states there is no other rate of duty.
However in computing the duty to be paid, various abatements are permitted. In the case of "Accomodation in Hotels, Inns, Campsites Services" under which Guest House Business is covered there is an abatement of 40% i.e service tax is payable on 60% of the invoice amount @ 14.5% and not on the whole invoice @ 8.7%. Due to this misconception, assessees default in collecting and making payments of Service Tax and Cess.
Since your turnover was Rs.19,31,400/- you are liable to pay Service Tax on Rs.9,31,400/- after availing of abatements allowable for the said service. (Item 2(a) of your query with amendments)
I hope this satisfies your query.
Most people are under the mistaken assumption that it is the taxable turnover that is to be computed under various services in computing the threshold limit of Rs.10 lakhs.
In the first instance, all that has to be done is to identify whether a particular turnover is taxable turnover or not. If the turnover is taxable then whether it exceeds Rs.10 lakhs or not. All taxable services are subject to duty at the rate of Service Tax 14%, Swatch Bharat Cess 0.5% and Krishi Kalyan Cess (w.ef.1st June 2016) 0.5%. Irrespective of what the service providers tax invoice states there is no other rate of duty.
However in computing the duty to be paid, various abatements are permitted. In the case of "Accomodation in Hotels, Inns, Campsites Services" under which Guest House Business is covered there is an abatement of 40% i.e service tax is payable on 60% of the invoice amount @ 14.5% and not on the whole invoice @ 8.7%. Due to this misconception, assessees default in collecting and making payments of Service Tax and Cess.
Since your turnover was Rs.19,31,400/- you are liable to pay Service Tax on Rs.9,31,400/- after availing of abatements allowable for the said service. (Item 2(a) of your query with amendments)
I hope this satisfies your query.
Message likes :
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01 June 2016
Thanks sir for detail explanation
02 June 2016
You are most welcome
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