Can we avail exemption limit of 10lakh if already reg. in st

Prasad (Sr. Manager) (617 Points)
Replied 26 September 2012

Hi Rabul

In my opinion the assessee should discharge the service tax liablity.

Vikas (CA) (1135 Points)
Replied 26 September 2012

Dear Rabul,

Please note the following :

1. The SSI exemption can not be claimed for each service;

2. The non-inclusion of service category of Renting of immovable property in itself an incorrect action by the assessee; Hence the assessee shall amend the ST-2 to include such service;

3. Once, the service tax is charged; the SSI exemption can not be claimed in the next year;

Conclusion :

1. Mr. A is required to pay service tax and shall show the same in the ST-3 to be filed for the period of April-12 to Sept., 12, as arrears paid;

2. Mr. A can do reverse calculation as per Sec.67(2) for the purpose of service tax liability.

1 Like

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 26 September 2012

Even if the service provider crosses turnover of specified limit in current year, he will be liable to service tax only on turnover exceeding the specified limits and not on his earlier turnover, so long as his taxable turnvoer during the previous year was less than specified limit.

However , if taxable turnvoer in current year exceeds the specified limit, there will be no exemption from service tax in the next Financial year. What is relevant is turnover of the previous year only

For example: if the value of taxable service was Rs. 8 lacs in the F.Y 2011-12, the person can avail exemption in 2012-13. Suppose his turnover of taxable servies was Rs. 12 lacs in 2012-13, he will be liable to pay service tax on Rs. 2 lacs in 2012-13. Next year ie, in 2013-14 he will not be eligible for any exemption and will have to pay service from 01/04/2013 even though taxable service is less than 10 lacs. suppose his turnover for the year 2013-14 comes down to 7 lacs, then in 2014-15 he can avail exemption up to First 10 lacs.

1 Like

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 27 September 2012

Originally posted by : Rubul
	Dear members Please explain if the assesee is liable to pay service tax in following case. Mr. A (prop. concern) is providing taxable service of repair of cellular phone/Mobile. Mr. A is registered under Service Tax department. In the F.Y 2010-11 his taxable service is Rs.3000000/- for which he had already collected ST and same is paid to Govt. Now in the year 2011-12 Mr. A did not provided any taxable service i.e income form repair and service is NIL. Subsequently he filled nil return for 2011-12. Mr. A purchased a Building on 1.4.2010 and the same building is let out on 1.4.2011 to a commercial Co. XYZ ltd. for which he has received Rs.840000/- p.a (Rs70000 per month). Mr. A did not charge any service tax on renting of Immovable property. Now my question is wheather Mr.A is liable to charge service tax on rent of Immovable property since he is already registered in Service tax and his taxable service exceed 10 lakh in Previous Year hence notification regarding exemption to Small scale Service provider will not apply. OR Mr. A is NOT liable to charge service tax since renting of Immovable property is a new service which is not covered in ST-2. and the rented premises is also not registered in ST-2. Further his taxable service is NIL in F.Y 2011-12 for which he is registered in ST dept. If Mr.A is liable to charge. Please tell me the procedure to tackle this situation as Mr.A has already filled NIL return. In my opinion Mr.A is liable to charge ST. Members please prove me wrong because this is a real case and if SCN is served on Mr.A then he will have to pay a heavy amount. (interest+penalty)

better to pay now and inform the department, otherwise they will dig the grave, :)

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 27 September 2012

Nicely explained by All specially Vikas and Sunil.

Regards,

1 Like

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 27 September 2012

Part I

For the year 2010-11 he exceeds the exemtpion limit of Rs. 10 lacs, therefore any taxable income for the F.Y 2011-12 is taxable and he has to pay service tax. For the F.Y 2011-12 he received Taxable Income of Rs. 8.40 lacs, the same is liable for service tax.

Part II

Mr. A is liable to pay service tax even though it is not registered with his ST-2 . He should amend the ST2 immediately and pay service tax with interest. No penalty would be leviable if the entire service tax amount along with interest has been paid on or before 28/11/2012 (section 80(2))

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Rubul (Student) (151 Points)
Replied 27 September 2012

Dear Members, If suppose in the above case-:

Mr. A transfer this property to his wife ( on the date of purchase itself by a gift deed, registry of the property is still in the name of Mr.A, and in the deed it is written that income from such property by way of rent etc. will be be received by Mr.A directly instead of his wife.)

Under ST their is no concept of deemed owner, clubbing of income etc. (like in Income Tax Act). As such Mrs.A is now owner of the said property and the income from the said property is less than 10 lakh and she is not providing any service other than Renting.

So now Mr.A is not liable to pay ST cause the taxable service is provided by Mrs.A not by Mr.A.

Please suggest whether i am correct or not??? Please suggest any other idea if I am wrong. Else the last option is to pay the ST as an arrear as suggested by CA Vikas (spcl thanks)

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 27 September 2012

when Mr A is receiving the rent, then the rental income is of Mr A, ownership does not matter, but the fact matters that who is receiving the rental ,

say X has rented some property to A aqnd A has rented it further to Z then A is liable to pay ST on amount paid by Z and X is liable for amount from A, ownership is 2nd issue, which can be dug by the officers in case of any complication or doubt.

direct taxes are much easy for adjustments and book entries, in comparison of indirect taxes, but not related anywhere in-between.

Vikas (CA) (1135 Points)
Replied 27 September 2012

Originally posted by : Sunil Kumar G
	Even if the service provider crosses turnover of specified limit in current year, he will be liable to service tax only on turnover exceeding the specified limits and not on his earlier turnover, so long as his taxable turnvoer during the previous year was less than specified limit. However , if taxable turnvoer in current year exceeds the specified limit, there will be no exemption from service tax in the next Financial year. What is relevant is turnover of the previous year only For example: if the value of taxable service was Rs. 8 lacs in the F.Y 2011-12, the person can avail exemption in 2012-13. Suppose his turnover of taxable servies was Rs. 12 lacs in 2012-13, he will be liable to pay service tax on Rs. 2 lacs in 2012-13. Next year ie, in 2013-14 he will not be eligible for any exemption and will have to pay service from 01/04/2013 even though taxable service is less than 10 lacs. suppose his turnover for the year 2013-14 comes down to 7 lacs, then in 2014-15 he can avail exemption up to First 10 lacs.