Service tax exemption

[Bijay Shrestha]

A company incorporated in FY 2014-15 and is providing service in FY 2014-15 for ₹ 9,50,000/-. Here the Company has not collected service tax from customers. Now in FY 2014-15, the Company has to register for Service tax and can claim exemption upto ₹ 10 Lakhs.

In FY 2015-16, The Company has provided services for ₹ 15 Lakhs. also not collected any Service Tax. Now the Company can claim exemption upto ₹ 10 Lakhs and pay service tax on ₹ 5 Lakhs. here the company has not collected any service tax.

So my query is whether the Company has to collect Service tax from customers of ₹ 5 Lakhs and pay to the Govt. or if the Customers do not agree to pay ST , then the Company has to pay from own pocket or ₹ 5 lakhs is considered to be inclusive of Service tax and make back calculation and pay service tax i.e ₹ 5 lakhs * 14.5/114.5 i.e. ₹ 63,319/- Service tax???

Please share your views friends.

AI Summary

Service tax collection obligation requires providers to register and remit tax on excess receipts; may gross up if uncollected.
Providers whose receipts exceed the small service threshold must register and remit service tax on amounts above the exemption. Whether tax is charged separately or treated as inclusive depends on the parties' agreement; if inclusive, the taxable value is determined by back calculation so that tax plus value equals the gross amount. Collecting tax separately preserves revenue, while inclusive treatment reduces net receipts and requires the provider to bear and remit the tax if customers will not pay.