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In the beginning of the F.Y. 2008-2009 xyz was expecting his Consultancy income to be Rs. 5,00,000 and till date actual Consultancy Income is Rs. 4,50,000 only and thus was exempted from Service tax as a small service provider. But during the end of this F.Y. he got a new assignment for Rs. 7,00,000. which made him liable to deposit Service Tax. Want to Know as he has not charged any Service Tax on RS. 4,80,000 earned Till date,

(i) Whether he have to pay Service tax on the same although he had not charged the same from his clients.
(ii) What would be the case if the income from new assignment is Rs. 5,00,000
(iii)Also want to know whether the exemption limit is for the amount Including Service Tax or without service Tax.

Dear Friend,

As I have earlier clarified that service tax exemption is based on some conditions and most important and basic condition is that

  • To avail service tax the current year, value of taxable service provided should not be more than exemption limit.
  • exemtion is not available on service provided on Brand name or trade name whether registered or not or of another person.
From your query it is assumed that last year service provided is also around Five Lakh and less than exmption limit.

so point wise answer to your queries are given below

  1. No ,service tax upto exemption limit i.e 1000000 ,the aggregate of first bills collected ,is not required to be collected,so no need to deposit tax on 480000(amount collected earlier)
  2. If income From new assignment is 700000 then total sale will be 480000+700000 =1180000,in that case firm should collect service tax on 11.80-10.00=1.80 Lakh only.and not on whole of the amount and more over in next year he has to deposit tax from the starting amount.And if assignment is of 500000 then total of first service receipt collected will be 9.80 Lakh i.e less than exemption limit of 10 lakh hence no tax is required to be deposited
  3. Exemption limit is calculated on the basis on" Value of taxable service provided" and not including service tax .so amount of exemption is to be calaculated without service tax.

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Service Tax Rate Chart Wef 01.06.2015 on all Services
SERVICE TAX EXEMPTION ON 11.80 LAKH Reviewed by RAJA BABU on 3/04/2009 Rating: 5 In the beginning of the F.Y. 2008-2009 xyz was expecting his Consultancy income to be Rs. 5,00,000 and till date actual Consultancy Income ...

1 comment:

  1. bag to differ from your views. In my view he have collect service tax on the whole 7,00,000/- as in this bill his service provided amount exceeded Rs. 10 Lakh. If the service provider like to avail the exemption of 10 Lakh then he have to split his bill in two amounts.

    If any bill amount take your service provided amount to more then basic exemption limit then you have to collect service tax on the whole bill amount not on any part of bill amount.

    So to avil the exemption he have to made two bill say one for Rs. 5,20,000/- and other one for Rs. 1,80,000/-