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Service tax on management consultants

Sunil Kumar (Finance executive) (29 Points)

14 December 2011

Hi friends,

I have a query on service tax, I want to get this clarified, pls help me.

1) I understand that there is an exemption upto 10lacs for Management consultants on ST. This means an Individual consultant need not collect and pay service tax for income earned upto 10 lacs. He/She should start charging service tax on the income earned more than 10 lacs. I hope this is correct.

2) When an individual consultant registered with service tax department, should he/she liable to pay service tax even if the income is less than 10 lacs??? Or is it more than 10 lacs???

Pls let me know.

Rgrds,

Sunil

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6 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 14 December 2011

service tax is not related to income but on amount of taxable services provided.

if the amount of taxcable services provided exceeds 9 lacs, he needs to register himself with ST and pay taxes when it exceeds 10 Lacs

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Sunil Kumar (Finance executive) (29 Points)
Replied 14 December 2011

hi Sir,

Thanks for your reply.

What if he/she is already registered with ST and taxable service provided to less than 10 Lacs??? Should he still pay ST?

Or he has to pay when it exceeds 10 Lacs even after having registered?

Looking forward to your response.

Rgrds,
Sunil

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 14 December 2011

Sharmaji is correct,

Once amount of taxable services exceeds 9 Lacs he needs to be register with the department, and if taxable services exceeds 10 lacs ST will pe payable from the Re.1 over 10 lacs,and from the next year service tax will be chargeable from Re.1 of taxable services (No limit of10 Lac will be applicable)

ee.g;

Mr. X is a professional service provider. During the year his taxable service amounts to Rs.8 Lacs.

Then he does not need to pay service tax on the same as taxable services does not exceeded Rs. 10 Lacs,

In the 2nd year taxable T/O amounted to Rs.12 Lacs,, then he needs to pay service tax on Rs. 2 Lacs (12-10) @ 10.3%. and needs to be registered when T/O exceeded Rs.9 Lacs.

If suppose in the 3rd year the T/O amounts to Rs.6 Lacs then ST will be payable on whole Rs.6 Lacs.

And suppose in the 4^th year if T/O amounts to Rs.8 Lacs then no ST will be payable as T/O in the last year did not exceeded Rs. 10Lacs.

Hope this may clear your doubt.

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