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Service tax

YOGESH (ENGINEER) (41 Points)

30 March 2009

Dear All,

I started an engineering services copmpany in July-08 and registered for service tax and collected service charge from client.

Now for next financial year, I am not likely to cross the limit of 10 lacs.

1) Can I discontinue charging service tax and file nill returns from April-09 onwards.

2) If, by chance, later in FY 09-10, it happens that I cross the 10 lacs limit, do I have to pay service tax for entire amount? Suppose I notice only in Dec-09 that I am crossing the limit of 10 lacs, how i handle the issue?

Yogesh

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11 Replies

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 30 March 2009

Originally posted by :YOGESH
"	Dear All, I started an engineering services copmpany in July-08 and registered for service tax and collected service charge from client. Now for next financial year, I am not likely to cross the limit of 10 lacs. 1) Can I discontinue charging service tax and file nill returns from April-09 onwards. 2) If, by chance, later in FY 09-10, it happens that I cross the 10 lacs limit, do I have to pay service tax for entire amount? Suppose I notice only in Dec-09 that I am crossing the limit of 10 lacs, how i handle the issue? Yogesh	"

Dear Yogesh,

In case your taxable services in 08-09 has not corssed Rs.10 L then you are eligible for exemption upto Rs. 10 Lakhs in 09-10. If the taxable services in the coming year crosses 10 say 12 then you are required to pay St on 2 Lakhs.

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(Guest)

Hey... I think one should pay service tax on the whole amount without deducting 10lacs...!

As far as I know... Service tax is exempted upto services provided for 10lacs and if it crosses 10lacs then the entire amount is liable for tax.

Let us say 12,00,000 is the total services provided in a financial year, then service tax is applicable on entire 12,00,000 /- and one needs to pay 12,00,000*12.24% = 1,46,880 is labile for tax.

Anoop (Service) (345 Points)
Replied 30 March 2009

Originally posted by :World is Yours
"	Hey... I think one should pay service tax on the whole amount without deducting 10lacs...! As far as I know... Service tax is exempted upto services provided for 10lacs and if it crosses 10lacs then the entire amount is liable for tax. Let us say 12,00,000 is the total services provided in a financial year, then service tax is applicable on entire 12,00,000 /- and one needs to pay 12,00,000*12.24% = 1,46,880 is labile for tax.	"

But since you were exempt (in the catagory of 10 lacs) and you have not charged service tax from customers and now the turover exceeds from 10 lacs (i.e. 12 lacs). You can not debit service tax to old customer because they are not your regular customer so how u can charge service tax on old amount (Rs. 10 lac)? Will it pay from own pockets and pay to govt. or any other rules? Pls. clarify.

Thanks in advance.

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 30 March 2009

Look for your turnover in 2008-09. If it is more than 10 lakhs, you have to pay ST from the very first bill. If it is less than 10L, you can avail exemption till 10L in 2009-10 and start paying ST after you cross the limit of 10L.

(Guest)

Originally posted by :Rajesh Kumar
"	Look for your turnover in 2008-09. If it is more than 10 lakhs, you have to pay ST from the very first bill. If it is less than 10L, you can avail exemption till 10L in 2009-10 and start paying ST after you cross the limit of 10L.	"

Sir,

My question is, if a person for last year rendered services less than 10L (need not pay tax) and in the current year he renders services more than 10L, say 12L (liable to pay tax) then should he pay tax on 12L or only 2L ?

As far as I know, last year he got exemption because he didn't cross 10L and now he crossed 12L, so then should he pay on 12L or 10L ? I think he should pay for 12L.

Please explain me, because I don't know how far I'm correct..!

Thank You

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YOGESH (ENGINEER) (41 Points)
Replied 31 March 2009

Dear All,

Thanks for your advice.

As mentioned in my original query, I charged service tax from my first bill for FY 2008-2009 and deposited to govt. But I did not cross 10 lacs. I once again quote from my original question....

Now for next financial year, I am not likely to cross the limit of 10 lacs.

1) Can I discontinue charging service tax and file nill returns from April-09 onwards.

For my first point, do I have to apply (to whom and how?) for exemption?

For second point, the debate is still open.

Best regards,

Yogesh

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 01 April 2009

From april, 09 onwards, avail exemption. Dont charge service tax on your bills. File nil return under Small scale exmeption. When you cross 10 lakhs, start charging service tax and pay.

vinod (trading) (30 Points)
Replied 22 August 2009

sir i want to knaw about service tax on Rent & Lease for FY-2009-10 , and what is the limit for Service Tax for Rant Income ,

vinod (trading) (30 Points)
Replied 22 August 2009

Originally posted by :vinod
"	sir i want to knaw about service tax on Rent & Lease for FY-2009-10 , and what is the limit for Service Tax for Rant Income ,	"

EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 25 August 2009

Originally posted by :YOGESH
"	Dear All, I started an engineering services copmpany in July-08 and registered for service tax and collected service charge from client. Now for next financial year, I am not likely to cross the limit of 10 lacs. 1) Can I discontinue charging service tax and file nill returns from April-09 onwards. 2) If, by chance, later in FY 09-10, it happens that I cross the 10 lacs limit, do I have to pay service tax for entire amount? Suppose I notice only in Dec-09 that I am crossing the limit of 10 lacs, how i handle the issue? Yogesh	"

If you collect SERVICE TAX from the clients and having Service Tax Registration No, You are supposed to SUBMIT the amount of Service tax to the Authority. If you are Registered with Service Tax Authority and have not crossed the target turnover you may not charge Service Tax and file NIL Return. Once you collect whatever negligible amount may be, you must pay the amount to Service Tax Authority