SUDHIR & PRADEEP JI (CA FINAL+LLB + DISA) (2299 Points)
27 May 2010A company doing management consultancy has registered itself ( in 2008),under Service Tax anticipating that its turnover would exceed the limit. However, till date the company's turnover has not exceeded the limit. Is the company liable to pay service tax
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 27 May 2010
Nope...... until service tax received from business exceeds Rs. 10 Lakhs...........
Service Tax would be charged on the amount exceeding Rs. 10 Lakhs......
and from the next year, from 1st day of Service...... even though below Rs. 10 Lakhs in next periods..........
hemal
(CA FINAL)
(176 Points)
Replied 27 May 2010
Limit of Rs.10 lakhs apply for the availment of SSI limit i.e. when in the previous year his taxable service exceed Rs.10 lakhs.If in the previous year his taxable service exceed Rs 10 lakhs, he is eligible for SSI exemption. If he is eligible then he is not required to pay service tax on first Rs.10 lakhs.
For Eg: In previous year 2006-07 x has provided service and receive payment for Rs.8 lakhs and in 2007-08 he has provided services of Rs.11 lakhs he will pay tax on Rs.1 lakh. Now in 2008-09 he is not eligible for SSI exemption as in previous year his limit exceed Rs.10 lakhs so if in 2008-09 he has provided Rs 5 lakhs srevices, he will pay tax on entire amount. Now again in 2009-10 he provid services of Rs.12 lakhs he is eligible for SSI exemption as his limit in previous year not exceed Rs.10 lakhs and eligible for SSI exemption and pay tax on Rs.2 lakhs only.
Here service provided means payment receive in respect of taxable service provided.
Dear,
Small service providers whose total value of services provided (including exempt and non-taxable services) is less than Rs 10 lakhs in previous year are not required to pay service tax in current financial year till they reach turnover of Rs 10 lakhs. Clubbing provisions can apply.
Exemption is linked with preceding year’s turnover.
‘’aggregate value of taxable services rendered by a provider of taxable service from one or more premises should not have exceeded Rs.10 lakhs in the preceding financial year”
Aggregate value of taxable services covers
Services in respect of which service tax is payable and Services in respect of which no service tax has been paid by virtue of any general exemption or specific exemption.
Manner of availing exemption.
Aggregate value not exceeding Rs.10 lakhs means
The sum total of first consecutive payments received during a F.Y towards gross amount charged by service provider towards taxable services till the aggregate amount of such payments is equal to Rs.10 Lakhs.
Ex. Security agency received the following payments
20.04.2010 Rs.5,20,000
26.06.2010 Rs.3,00,000
27.07.2010 Rs.3,20,000
Total consecutive payments Rs.11,40,000
At this stage security agency will claim threshold exemption up to Rs.10 lakhs and pay the tax on the balance of Rs.1,40,000.
Thereafter, on all payments received from 27.07.2010 to 31.03.2011 the security agency will have to pay tax.
Regards
K.Ilayaraja
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