Exemption limit

[hari kasiviswanathan]

A chartered accountant has rendered taxable services for a value of rs. 9 lacs. In the same year he gets a bank audit assignment which would take his taxable service beyond the threshold of 10 lacs. In this case, how will he raise a bill for the bank audit services because a portion of the bill would be within the threshold and balance only would actually be taxable. However, to the bank, you have to intimate whether you are liable for service tax or not and levy service tax if it is applicable.What is the methodology for raising the bill, filing returns and payment of tax as you would have collected service tax on the total bill value and not on the amount exceeding the threshold. Learned forum members views solicited.Thanks

[CASeetharaman KC]

The bill can be raised for the full amount whereas service tax should be calculated only on the balance amount i e the balance remaining after the threshold limit is exceeded, in this case the amount of the bank audit fees less 1 lakh ( balance of threshold exemption remaining). To clarify the situation a note can be appended to the bill stating that service tax has been calculated on the balance taxable amount after availing the threshold exemption.

AI Summary

Service tax threshold: levy tax only on amount exceeding exemption; bill full fees and disclose the taxable portion. When aggregate receipts cross the service tax threshold, compute service tax only on the portion exceeding the exemption; invoice the full fee but calculate, collect, remit, and report tax solely on the balance remaining after applying the unused threshold exemption, and append a note to the bill stating that service tax has been calculated on the taxable excess.