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Threshold Exemption Limit

CA PRAMOD SARAOGI (Chartered Accountant) (1113 Points)

19 October 2008

Basic value of Services provided in the year 2007-08 = 9 Lakh . Billed to Clients : Rs. 8 Lakh without adding Service Tax ( applying threshold exemption limit) and Rs. 1 Lakh with addition of Service Tax of Rs. 12360 Payment Received in 2007-08 = 7 Lakh and remaining payment received in the year 2008-09 . During 2008-09 Service provided and received Rs. 4 Lakh (Billed at Rs. 4.00 without Charging Service Tax) . What should be the amount of exemption in the year 2008-09? Total payment received is Rs. 2 Lakh Plus Service Tax 12360 pertaining to the year 2007-08 and Rs. 4.00 Lakh pertaining to the current year 2008-09. If the entire amount is exempted then what should be the treatment of the Service Tax of Rs. 12360 collected in 2007-08 for which the service user has or might have already taken cenvat credit.

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4 Replies

SIDDHARTHA SANKAR ROY (Government Servant -MOF) (868 Points)
Replied 19 October 2008

Originally posted by :CA PRAMOD SARAOGI

I think the provider of service in such case has to return the service the tax amount of Rs 12360 so collected from his service recipent and the receipent has to reverse the cenvat credit if already taken.

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Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 20 October 2008

The exemption for the current year is Rs.10 lakhs. Pr yr since billed and collected ST the same is reqd to be paid as others receipts with a disclosure that the same pertains to pr yr. This year once the collections excluding the one where ST collected reaches Rs.10 lakhs the ST wouldbe reqd to be paid.

CA PRAMOD SARAOGI (Chartered Accountant) (1113 Points)
Replied 21 October 2008

Factually you seem to be correct but according to the Explanation (B) to the Notification No. 6/2005-ST dated 1-3-2005 the expression "aggregate value not exceeding 10 Lakh of Rupees" means the sum total of first consecutive payments received during a financial year towards the Gross amount charged towards taxable services till the aggregate amount of such payments , is equal to Rs. 10 lakh. It means for the financial year 2008-09 , payments received on or after 01-04-2008 will be the starting point , even if payment relate to services provoded before 1-4-2008 , it will form part of the aggregate value not exceeding Rs. 4 lakh.( Reference S.S.Gupta ). Also refer Sunil B Gabhawalla

(Guest)

please let me know my service tax liabilities as per records . gross billing for fin year 2007-08 rs.875000/ without charging service tax. net receipt in 2007-08 rs.11lac for which i have deposited the service tax in year 2007-08. i have .received rs.540000 in fin year 2008-09 pertaining to the year 2007-08 billing. whether i am exmpted upto 10 lac this year.taxation supt saying to deposit the service tax.