Service tax liabilty

[Navi mumbai sez pvt ltd NMSEZ]

A service tax provider providing taxable service in his individual capacity. The threshold limit is Rs 10 LACS. He has obtained Registration after crossing limit of Rs 9 LACS. In the subsequent month his payment is crossing Rs 10 lacs by a marginal amount of Rs 10,000/- what will be taxable amount for this month payment . Is it on Rs 10,000/- or on total amount of this month payment or on the whole amount including exemption of Rs 10 lacs. The service provider has provided service in the current Financial year.

[SANJEEV JADHAV]

Dear Sir,

As per provosion contained in the service tax, if your turnover in the preceeding financial year does not exceeds the taxablie limit of Rs. 1000000, then only you can avail exeption limit of Rs. 1000000/- in the current year.

If answer for above is yes, then you have to pay service tax @ 10.30% on Rs. 10000/- , i.e. you have to pay service tax 1030/-.

 

[CA Rachit Agarwal]

In our opinion tax would be payable on whole of the amount. Service Tax is not like income tax, where slab has been fixed. Once it has exceeded Rs. 10 Lacs, service tax to be charged on entire amount i.e. Rs. 10,10,000/-. You can raise the supplementary bills for the service tax amount.

if you have not been assessed to service tax in respect of this service in the previous years as you have stated here, you will be taxed on the amount in excess of Rs. 10,00,000 only and not on the whole amount of services provided prior to the amount in excess of rs. 10,00,000.
However, in the succeeding years, you shall have to pay service tax to the govt on all the amounts that are billed as this is not the first year that you are registered to service tax.

AI Summary

Service tax threshold: tax applies on amounts exceeding threshold when prior year turnover allows current-year exemption.
Service tax liability hinges on preceding-year turnover and first-year assessment status: if the preceding financial year turnover did not exceed the exemption ceiling, the exemption for the current year can be claimed and service tax is payable only on amounts exceeding that threshold; if the provider was taxable or exceeded the threshold in prior years, the exemption is not available and tax applies to gross receipts in the taxable year.