Service Tax

[Asked by Guest]

Dear sir,

We have paid service tax ₹ 233107/-

break up is

Scientific & Technical Consultancy 140907/-

Scientific & Technical Consultancy 87973/-

Primary Educaiton Cess 2818/-

Secondary & higher education cess 1409/-

for below value

For F.Y. 2013-2014 Rs.2285625

For F.Y. 2014-2015 Rs.2238425

Kindly give us breakup of % of Service Tax as per challan paid because Service tax people scrutinise our details since we were not in Service tax for above year

Best Regards,

Chandrakant

[Ganeshan Kalyani]

You have paid the tax on what basis. I hope you would calculated on the basic amount and therefore you should have the bifurcation.

[KASTURI SETHI]

As mentioned by you, you were not in Service Tax during the period 2013-14 & 14-15 and it appears that you have not collected Service Tax from your service receiver. You are also entitled to threshold exemption limit of Rs.ten lakhs for the year 2013-14. In case you have not recovered Service Tax from the service receiver, you are also entitled to cum-tax benefit under Section 67 (2) of the Finance Act. After the benefit of threshold exemption limit of ₹ 10 lakhs, taxable value works out to ₹ 12,85,625/- (without cum-tax benefit) for 2013-14 for which Service Tax works out to ₹ 1,54,275/- whereas you have deposited ST of ₹ 1,40,907/-. For the year 2014-15 you are not entitled to the benefit of ₹ 10 lakhs again, so payable Service Tax works out to ₹ 2,68,861/- on taxable value of ₹ 22,38,425/-(without cum-tax benefit). Since Service Tax paid by you is incorrect, so Education Cesses paid by you are also incorrect. Education cesses have to be calculated on the correct amount of Service Tax to be paid.

During 2013-14 percentage of Service Tax paid works out to 10.96% calculated after allowing threshold exemption limit and during 2014-15 it works out to 3.93%.

[DR.MARIAPPAN GOVINDARAJAN]

Dear Kasthuri Sir you have given a fantastic calculation for the querist.

[Ganeshan Kalyani]

Yes I agree. Kasturi Sir's reply is to the point and in lucid language. Thanks.

[KASTURI SETHI]

Sh.Mariappan Govindarajan Ji and Sh.Ganeshan Kalyani Ji,

I am really thankful to both of you, Sirs.

AI Summary

Threshold exemption alters service tax liability; paid tax and education cesses need recalculation claiming cum-tax benefit.
The taxpayer deposited service tax and education cesses while not registered and without collecting tax; after applying the threshold exemption and claiming the cum-tax benefit, taxable value and payable service tax for 2013-14 are reduced (producing a lower tax than deposited), whereas for 2014-15 the exemption is unavailable and correct payable tax exceeds the deposit. Consequently, the Primary and Secondary/Higher Education Cesses paid are incorrect and must be recalculated on the corrected service tax amounts.