ABATEMENT Vs EXEMPTION

[Abhisek Tibrewal]

On availing abatement under notification no.- 34/2011-S.T. ; can the threshold exemption limit of Rs. 10 Lakhs be claimed, being the first year of operation of the hotel (accomodation service provider) ?

[Deepak Nagori]

Dear Abhishek,

Yes the exemption limit of Rs. 10 lacs can be availed and service tax shall be payable for billings in excess of Rs. 10 lacs for the first year. From next year, though, you would have to charge service tax right from the beginning.

Regards

CA Deepak Nagori

[RadheyShyam Mangal]

The Exemption will be on first 10 lacs being gross amount without any abatement which may be noted.

AI Summary

Threshold exemption available in first year; tax applies only on billings exceeding threshold, thereafter taxed from start.
The threshold exemption is available in the first year of operation; service tax is payable only on billings exceeding the threshold in that year, while from the next year tax must be charged from the start. The exemption is determined on the gross amount and is not reduced by abatement.