Service-tax-liability for proprietor-of-1-regd-business started 2nd-unregd. business

[Guest]

As a proprietor my friend has a business registered in Service Tax. The Registration uses a Commercial Name-1 instead of personal name. His turnover was greatly reduced to less than 1 lac in FY 2016-17

In January'2017 he started providing services in a different field but with a different Commercial Name-2. Also premises/ address is different. Clients are also different for both business Name-1 & Name-2

in FY 2016-17 The turnover of Business Name-2 was less than 5 lacs. Is he liable to pay Service tax for Business Name-2 ?He has not charged Service. Tax. from his clients

If he has to pay Service Tax than his income will be reduced by 15% ST + Penalty + Interest

There is no confusion that he will file personal Income Tax return by adding all incomes of Business Name-1 & 2 and from all other sources. Kindly quickly give advise because only 2 days are remaining to file personal income tax

[Raghunath Gadre]

If total income under single PAN number is exceeding the taxable limits U have no option but to pay tax

As far as GST is concern he may not opt for registration till he cross the limit of ₹ 20 lac turnover in financial year

[Guest]

Shri Garde thanks.

The question is Pre-GST and for service tax

specific to scenario, whether my proprietor friend is liable to pay service tax for Business Name-2 that is not registered with Service Tax

[KASTURI SETHI]

We are talking about pre-GST era. Turnover of all will be clubbed. Still you remain below ten lakhs. No ST liability. If no liability, no interest and no penalty is payable.

If your turnover of all units crosses 10 lakhs during the preceding year i.e. 2016-17, then in 2017-18 you will not be eligible for threshold exemption of 10 lakhs. In the year 2017-18, you will start paying ST from the day one i.e. Re one.

From 1.7.17, scenario is entirely different.

[Guest]

Thanks Kasturi Ji

Point of clubbing turnover is understood if there is no service tax registration

However Doubt remains on treatment when Business Name-1 is registered with Service Tax and Business Name-2 is not registered with service tax

As per rules, once registered with S.T., irrespective of turnover in future years, Business Name-1 has to collect ST from customers & Pay to Govt / S.T.

... ... but due to clubbing of turnover will unregistered Business Name-2 will also have liability to pay Service Tax?

[KASTURI SETHI]

Answer to query is yes.

AI Summary

Service tax liability: aggregated proprietor turnover can make an unregistered business liable to pay service tax. A proprietor's separate businesses under one PAN have their turnovers aggregated for pre GST service tax threshold purposes; if aggregated receipts exceed the exemption threshold the proprietor must charge, collect and remit service tax and may face interest and penalty. Additionally, existing service tax registration for one business creates an ongoing obligation to collect and pay tax, and aggregation/registration can render an otherwise unregistered trade name liable under service tax rules.