Service tax chargiability - benefit of exemption limit

[Guest]

Thanks, for the reply, from your reply it is clear that definition of , “aggregate value of taxable services” as defined in Notif. No. 26/2005 & 27/2005 has no bearing on the same term given in condition no. (viii) of the Notif. No.6/2005. Further from your reply another question arises as under : 1. Total taxable Billing in year 2006-07 : Rs. 7 lacs, Hence now we can avail benefit of exemption upto Rs.8 lacs, Then in year 2007-08, We received payment of Rs. 11 lacs ( out of which Rs.2 lacs is for the billing done in year 2006-07), while balance payment received is for the billing in year 2007-08. Under above circumstances, I believe foll. need to be done :

1. deposit service tax on Rs.2 lacs received for billing done in year 2006-07.

2. deposit service tax on Rs.1 lacs ( Rs.9 lacs – Rs.8 lacs) for the payment received against billing done in year 2007-08. Am I right ? and further I need to charge service tax on my billing once I cross the limit of Rs.8 lacs whether or not I have received the payment of Rs.8 lacs till that time for the services rendered in the year 2007-08. Pls. clarify.

[Surender Gupta]

Since, your received would be Rs. 11 lacs, you are required to pay service tax on Rs. 3 lacs (i.e the amount exceeds Rs. 8 lacs)and till your receipts do not reaches the limit of Rs. 8 lacs, you are not required to pay service tax under notification no. 6/2005 (F. Y. 2007-08)

AI Summary

Service tax exemption threshold: chargeability follows receipts and arises only when receipts exceed the exemption limit. The exemption notification operates on a receipts-based chargeability: service tax is payable only on the portion of total receipts in the fiscal year that exceeds the exemption limit. Receipts received in the fiscal year, including payments for prior-year billing, are aggregated for this purpose, and tax is due on the amount by which such fiscal-year receipts exceed the exemption threshold.