Small service provider - Exemption

[Guest]

Small service providers are exempt from service tax under notification no.33 / 2012 upto a aggregate turnover of Rs. 10L during a financial year. Now my question is in case if the turnover in financial year 2009 - 10 is 12L, financial year 2010 - 11  is Rs.7L, financial year 2011 - 12 is Rs.15L and financial year 2012 - 13 is Rs.5L.  whether once service provided in financial year 2009 - 10 is more than Rs.10L limit then will it be required to charge service tax for all the next years even though the service provided in next years is less than Rs.10L

[Brijesh Verma]

For availing exemption under  Notification no..33/2012-ST., the precondition is the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed ten lakh rupees in the preceding financial year.

Now your example states:

Year              Receipts

2009-10           12 Lkhs

2010-11            7

2011-12            15

2012-13             5

Now in this case, in 2009-10 there will be an exemption of Rs. 10 Lks [assuming that either 2009-10 is the first year of business or the receipts in 2008-09 is below thereshold limit] and tax will be levied on 2 lks. Now since for year 2010-11 the preceding year is 2009-10 in which the aggregate was above 10 lks hence there will be no exemption in 2010-11 and full 7 lks will be taxable. 

However, again in 2011-12 the preceding year is 2010-11 in which the aggregate was below 10 hence there will be an exemption of 10 lkhs and tax will be levied on 5 lkhs. 

Further, on the same basis as 2010-11, tax shall be levied on 5 lks in 2012-13

[Praveen Mittal]

Dear Brijesh Verma,

thx for your reply.  would appreciate if you plz support your views as in the  Notification no..33/2012 nowhere it has been mentioned that the previous year figure shall be considered for the purpose of checking the threshold limit of Rs.10L

regards

Praveen Mittal

 

[Brijesh Verma]

The para No. 2 [which contains 8 conditions to be fulfilled for availing the benefit under  NN.33/2012.] states in its condition no. (viii)

 (viii) the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed ten lakh rupees in the preceding financial year. [emphasis supplied]

[Praveen Mittal]

thx a lot sir!

AI Summary

Small service provider exemption hinges on preceding year's turnover, determining service tax applicability in subsequent years. Exemption for small service providers requires that the aggregate value of taxable services from one or more premises does not exceed the threshold in the preceding financial year; eligibility in any year is determined by the immediately prior year's aggregate. Applying this test to the example, a year with receipts above the threshold removes exemption for the next year, while a year below the threshold restores exemption for the subsequent year, with tax charged on amounts exceeding the threshold in years where exemption applies.