GTA service tax

[Guest]

For example my turnover is 50 lakhs in a year . Around 40% of items are exempted form service tax( rice, pulses, milk, salt , foodgrains etc...) ie 20laks are exempted . In remaing 30 lakhs 70% is abated .ie 3000000 - 2000000 = 9 lakhs .Now my taxable service is 9 lakhs only. Can I get small scale exemption now ? Please clarify

[KASTURI SETHI]

My answer is NO. Pl go through Para 2(viii) of Notification No.33/12-ST dated 20.6.12 as amended. It starts with, "aggregate value of taxable service and not taxable value. Service is taxable but exempted by way of abatement.

[Guest]

Sethi sir , whether the GTA has to pay service tax for the 9 lakhs?

[KASTURI SETHI]

Dear Sir,

In the example given by you, your figure of ₹ 9 lakhs is incorrect. Out of 50 lakhs, twenty lakhs is fully exempted. From ₹ 30 lakhs, deduct threshold exemption limit of Rs.ten lakhs. From remaining balance of ₹ 20 lakhs, avail abatement of ₹ 14 lakhs (70%). Now ST is to be paid on taxable value of Rs.6 lakhs and not 9 lakhs.

Pl. note that if you have already crossed threshold exemption limit of Rs.ten lakhs in the preceding year, no threshold exemption is admissible this current year.

[Ganeshan Kalyani]

Sir, I agree with the views of Sri Kasturi Sir. In detail reply submitted indeed. Thanks.

AI Summary

Threshold exemption for service tax reduces taxable GTA turnover after exempt supplies and statutory abatement are applied. For GTA services, compute taxable value by excluding fully exempt supplies, deducting the threshold exemption from the remaining taxable-service value, and then applying the notified abatement percentage to that post-threshold balance; the residual after abatement is the taxable value. The threshold exemption is disallowed for the current year if the threshold was exceeded in the preceding year. The aggregate value principle governs treatment of taxable and not-taxable value under the relevant notification.