Registeration and Taxability

[VIGNESH]

Sir one of my client has registered under service tax in April 2015 and he has received rent from commercial property ₹ 20.00 Lakhs and he has started paying service tax after Crossing ₹ 10.00 Lakhs only on the assumption that, the first 10.00 lakhs is not liable for tax and he has not charged from the client too. is that correct? can u give any notifications for the same!

[Shilpi Jain]

Only in the first year he crosses 10L he would not be liable to ST on the 10L. Next year onwards liability will exist on entire 20L

[Ganeshan Kalyani]

Sir, in the first year of registration the threshold exemption of ₹ 10 lacs is available. That means you have to pay service tax on amount above ₹ 10 lacs. In the next year, since registration is already there, service tax is to be charged right from first invoice.

[KASTURI SETHI]

I agree with both experts. In this context, pl. refer to Notification No.33/12-ST dated 20.6.12 (effective from 1.7.12) (Clause No. viii refers.). Relevant extract of notification is appended below:

Provided that nothing contained in this notification shall apply to,-

(viii) the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed ten lakh rupees in the preceding financial year.

Preceding means previous, coming before something in order.

[VIGNESH]

Sir. 1. in a case where the previous year turnover was below 10 lakhs and for the current year the Rental income crosses 10 lakhs (ie 1. Bill.No.1. ₹ 9,35,000+ Bill.No. 2. ₹ 1,20,000/-) should we charge Service Tax for the last bill of ₹ 1,20,000/- or for an amount exceeding 10.00 lakhs i.e for ₹ 55,000/- alone 2. Registration is done on 30.09 2015 and client have an input service bill with Tax of ₹ 22,000/- dated 31.07.2015, can he claim the service tax portion after he starts filing Service Tax Returns and paying Taxes during the financial year 2015-2016?

AI Summary

Service Tax Threshold Exemption: Tax on Rent Over 10 Lakh in First Year; Full Charge from Next Year. A client registered for service tax in April 2015 and received 20 lakh in rent from commercial property. They began paying service tax only after exceeding 10 lakh, assuming the first 10 lakh was exempt. Experts clarified that in the first registration year, the threshold exemption applies, meaning tax is due only on amounts over 10 lakh. From the following year, tax must be charged from the first invoice. A notification (No.33/12-ST) supports this, stating the exemption doesn't apply if the previous year's taxable services exceeded 10 lakh. Questions were raised about billing and claiming input service tax.