restaurant services-threshold exemption limit

[sunil mehta]

As confusion is prevailing even among professional community whether threshold exemption limit for restaurant service provider is rs.10 lacs or rs. 25 lacs?    

 

Now, according to me as per Nofn.33/2012 dt.20/06/2012 it is ''aggregate value of taxable services...''

And as per rule 2C of Determination of value service'  (sr.no. 1) it is ''service portion in an activity .......'' --40 % of the total amount charged is the service portion.So if the turnover is 25 lacs then 40 % of 25 lacs is rs.10 lacs will be exempted.If turnover exceeds 25 lacs then only service tax is payable for a new service provider.

Restaurant services is not subjected to Abatement notfn. no.26/2012.This chapter is governed by rule 2C .

Pl. comment on this

C.A. Sunil Mehta

email-id:[email protected]

[sanjeev bajaj]

I endorse your view fully.

Sub Section (4) of section 67 refers the value as may be prescribed. Hence, rules applies for the same although abatement notifications gives option to pay service tax on the value to avoid the litigation in ascertaining the value of services. Hence, value of services will be 40% of invoices issued or required to be issued.unless and until fall under the bundled services.

View endorsed. If any person has different opinion, pl come forward.

[sarjerao ghadge]

Sir,

           The taxable value in the instant case is 40% of gross value ;so when gross value is 25 lakhs ;taxable value is 10 lakhs as deduction on cost of food item is essential and service tax is only on the part of service portion.The unit is eligible for 25 lakhs gross value.

S.D.GHADGE.

 

AI Summary

Threshold for restaurant service tax tied to the taxable service portion; exemption depends on aggregated service-portion staying below the prescribed limit. Threshold for restaurant service exemption is assessed on the aggregate value of taxable services; the value-determination rule treats the service component as a fixed proportion of the total charged, so a provider whose aggregated service-portion remains at or below the prescribed exemption ceiling is exempt. Restaurant services are not covered by the abatement notification cited and are governed by the value-determination rule; bundled-service treatment may change the proportional allocation and affect liability.