Treatment of service tax when services with material
This query is : Resolved
25 October 2014
An architect is providing the services of Building Construction/ interior designing with material. How the service tax would be applied when:
1. Services started from April 2014 in a Pvt Ltd Company;
2. When Gross services have offered for Rs. 24 Lacs up to September 2014.
Now, whether we will get the basic Exemption of Rs.10 Lacs and after wards 40% would be recognized as Taxable services or
After abatement, we may get the exemption up to Rs. 10 Lacs ( Basic Exemption)
Kindly Clarify.
CA Alok Goel
M -098370 80659
1. Services started from April 2014 in a Pvt Ltd Company;
2. When Gross services have offered for Rs. 24 Lacs up to September 2014.
Now, whether we will get the basic Exemption of Rs.10 Lacs and after wards 40% would be recognized as Taxable services or
After abatement, we may get the exemption up to Rs. 10 Lacs ( Basic Exemption)
Kindly Clarify.
CA Alok Goel
M -098370 80659
25 October 2014
Let’s refer Notification 26 & 33 of 2012 which provides for abatement and threshold limit exemption.
Notification 33/2012
“ In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance Act), and in supersession of the Government of India in the Ministry of Finance (Department of Revenue) notification No. 6/2005-Service Tax, dated the 1st March, 2005, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. number 140(E), dated the 1st March, 2005, except as respects things done or omitted to be done before such supersession, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said Finance Act:……………..”
Notification 26/2012
“ In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act), and in supersession of notification number 13/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 211 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (2) of the Table below, from so much of the service tax leviable thereon under section 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said Table, of the amount charged by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the corresponding entry in column (4) of the said Table, namely
Plain reading of both the notification establishes the fact that the aggregate value of Rs 10 lakhs of the taxable services is exempt from the service tax. Taxable services do not include exempted services or services listed in negative list. Notification 26/2012 exempts the services to the extent of abatement. Therefore in your case, 60% of the value of services would be exempt and not taken for aggregate value of services. After aggregate billing of Rs 22,50,000 (9,00,000 / 40%) your client is required to be registered and after aggregate billing of Rs 25,00,000 (10,00,000 / 40%) your client is required to pay the service tax.
Notification 33/2012
“ In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance Act), and in supersession of the Government of India in the Ministry of Finance (Department of Revenue) notification No. 6/2005-Service Tax, dated the 1st March, 2005, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. number 140(E), dated the 1st March, 2005, except as respects things done or omitted to be done before such supersession, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said Finance Act:……………..”
Notification 26/2012
“ In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act), and in supersession of notification number 13/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 211 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (2) of the Table below, from so much of the service tax leviable thereon under section 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said Table, of the amount charged by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the corresponding entry in column (4) of the said Table, namely
Plain reading of both the notification establishes the fact that the aggregate value of Rs 10 lakhs of the taxable services is exempt from the service tax. Taxable services do not include exempted services or services listed in negative list. Notification 26/2012 exempts the services to the extent of abatement. Therefore in your case, 60% of the value of services would be exempt and not taken for aggregate value of services. After aggregate billing of Rs 22,50,000 (9,00,000 / 40%) your client is required to be registered and after aggregate billing of Rs 25,00,000 (10,00,000 / 40%) your client is required to pay the service tax.
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25 October 2014
In this way , we may get the exemption and abatement together?
CA Alok Goel
CA Alok Goel
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