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Service tax exemption for edu. instt billing & other billing

Nikhil (Dir) (26 Points)

26 March 2014

Dear All,
My company has billed an educational institution for providing content to them. As per the Notification No. 25/2012-Service Tax read with notification 3/2013, it is exempt from service tax. The amount for the same was 15 lakhs.
Now, I have to bill another firm, which is non-educational, for an amount of Rs. 5 lakhs.
Now, my question is whether I would have to add on service tax on this amount of Rs. 5 lakhs.

This question arises because I have already billed an educational institution for more than 10 lakhs, and have not charged service tax to them. Is the service tax on combined transactions, or treated separately (which would make Rs. 5 lakhs non-taxable under service tax)

Thanks for your expert guidance in advance.

Nikhil.

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CA Anil Agarwal (Practicing CA) (67 Points)
Replied 26 March 2014

Hi Nikhil,

Service Tax act/Rules has provided exemption to small scale service provider from service tax up to aggregate value of taxable services provided of 10 lakh in a Financial Year .

If service provider is providing both exempted and taxable services than turnover of exempted services is not be added for calculation of 10 lakh .
Similarly abatement from gross amount charged by service provider has been defined in notification 26/2012 .To calculate 10 lakh part only taxable part after abatement is to be considered.

The Finance Act 2012, has amended the provision relating to small scale exemption recognizing that the aggregate value up to Rs 10 Lakhs will be in terms of invoices issued/to be issued for taxable services and not payments received.(Notification no.33/2012-ST dated 20.6.2012). This is w .e .f 1.7.2012.

So to the best of my knowledge you are not required to charge Service TAx on Rs.5 Lakh as your prior billing was for Exempted Services.

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