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requirement of service and state sales tax registration

Karthik Mohan Prabhu (Associate) (73 Points)

20 April 2011

Hi Guys,

This query is on behlaf of a private limited company which was formed in Karnataka (Bangalore) in the month of Feb 2011. We would be selling computer annual maintanance plans to consumers and businesses in bangalore. What are the kind of taxes we would have to pay and how does the registration process work. We are not selling any hardware or raw materials. We are purely into service and it covers computer support and maintanance for the public and businesses. I had confirmed earlier that VAT wont be required as we are purely into services. Please do advice what type of taxes would be applicable and the process to register the same.

Regards

Karthik

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 20 April 2011

Originally posted by : Karthik Mohan Prabhu
	Hi Guys, This query is on behlaf of a private limited company which was formed in Karnataka (Bangalore) in the month of Feb 2011. We would be selling computer annual maintanance plans to consumers and businesses in bangalore. What are the kind of taxes we would have to pay and how does the registration process work. We are not selling any hardware or raw materials. We are purely into service and it covers computer support and maintanance for the public and businesses. I had confirmed earlier that VAT wont be required as we are purely into services. Please do advice what type of taxes would be applicable and the process to register the same. Regards Karthik

if the service part exceed 10 lacs per year - service tax

if the parts sale ( comprehensive amc) exceed 5 lacs = State VAT

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AGREED WITH US SHARMA

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Karthik Mohan Prabhu (Associate) (73 Points)
Replied 20 April 2011

So does that mean no tax registration is needed till me meet the limit of service part exceed 10 lacs per year - service tax parts sale ( comprehensive amc) exceed 5 lacs = State VAT

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 April 2011

Originally posted by : Karthik Mohan Prabhu
	So does that mean no tax registration is needed till me meet the limit of service part exceed 10 lacs per year - service tax parts sale ( comprehensive amc) exceed 5 lacs = State VAT

if u want to issue vat bills to client then only go for vat registration.

in service tax there are two components

1) pure service

2) works contract ( amc comes under this too) which is inclusive of materials used.

Karthik Mohan Prabhu (Associate) (73 Points)
Replied 22 April 2011

We do not have any requirements ahead of us. Vat wont be needed as we are dealing with services. My question is as a start up do we need to do any service or sales tax registration ??

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 22 April 2011

sales tax is history, sales tax is applicable on certain goods of high value only, now VAT is under force

for purchase u have to pay full vat, irrespective of fact that u r registered or not. but u can have provision of set off the tax paid on purchase if you sale the goods to next buyer after charging vat.

if u dont have any such complication of isse vat tax invoice, then go for ............works contract ( AMC registration) where u can have 60% abatement and u have to pay service tax on 40% of invoice value only ( 4.12% of gross invoice)