How to calculate threshold exemption limit of ₹ 10 lakh

[samiuddin ansari]

Sir,

An unregistered service provider engaged in providing taxable services i.e.Business auxiliary service and Restaurant service have been asked by the tax consultant to get themselves registered with Service Tax. I have some confusion on this aspect. In fact, they have a turnover of ₹ 6 lakhs in providing Business auxiliary service and ₹ 7 lakhs as income from Restaurant service in the last F.Y-2015-16. For calculating the threshold exemption limit as provided under Notification No.33/2012-S.T whether a total amount of ₹ 15 lakhs is to be taken into consideration for total taxable value or ₹ 08.80 lakhs i.e. ₹ 6 lakhs plus ₹ 2.8 lakhs (40% of Restaurant service income after allowing abatement of 60%).

Thanks with regard.

[KASTURI SETHI]

Total turnover of of both (without abatement) is to be considered for computing threshold exemption limit of ₹ 10 lakhs. It is natural that an assessee is eligible for abatement only after he is registered with Service Tax department. It is not possible to avail abatement without registration. You are required to apply for registration as soon as you cross ₹ 9 lakhs.

[Rajagopalan Ranganathan]

Sir,

I agree with the views expressed by Shri. Sethi Sir.

[Ganeshan Kalyani]

I am also of the same view as expressed by learned experts. Thanks.

AI Summary

Service provider must consider full turnover of 15 lakhs for Service Tax exemption; registration needed after 9 lakhs. An unregistered service provider offering Business Auxiliary and Restaurant services inquired about calculating the threshold exemption limit of 10 lakhs for Service Tax registration. The provider's turnover was 6 lakhs from Business Auxiliary services and 7 lakhs from Restaurant services in the previous financial year. The query involved whether to consider the full 15 lakhs or 8.8 lakhs (after a 60% abatement on Restaurant services) for the exemption limit. Respondents advised that the total turnover of 15 lakhs should be considered without abatement for the threshold, and registration is required once 9 lakhs is exceeded.