threshold exemption in case of abatement

[AMARISH TIWARI]

Dear Sir,

My client is a transporter , he can claim abatement of 75%, He has just taken  service tax registration,  number, how should i caculate threshold limit of Rs.10 Lac?

He will come in tax after turnover of 10  lac or after turnover of 40 Lac( because he will claim 75% abatement that will come to 30 Lacs, then he will claim threshold exemption Rs. 10 Lacs.as per my point of view)

thanking you

CA>Amarish Tiwari

[rajkumar shukla]

As  per explanation (B) in the Nofn.1/2006 "Aggregate value not exceeding ten lakh rupees' means the sum total of first consecutive payments received during a financial year towards a gross amount, as prescribed under section 67 of the Finance Act charged by the service provider towards taxable services till the aggregate amount of such payments is equal to ten lakhs.Thus it implies that for computing 10 lakhs, payments received are to be counted and not the amount after abatement.

[NANDKUMAR SAGWEKAR]

 while calculating the limit of Rs.10 Lakhs , the value of taxable services on which service receiver has to pay the service tax not to taken into consideration. In instance case your client is service provider and provides taxable services of Rs. 17 Lakhs during the F Y but out of which taxable value of service (GTA ) to the Specified category of service receiver say Ltd Company or excisable dealer is Rs.12 Lakhs and others Rs. 5 Lakhs then also he is able to claim the Small service provider exemption of Rs.10 Lakhs .

While calculating the limit of Rs. 10 Lakhs , value before abatement to be considered and not after.

 

Thanks

 

ANAND SHEMBEKAR

CELL NO. 91-9421187122

 

[NEERAJ KUMAR, RANCHI]

Yes I do agree with the views presented above. Your client will come in tax only after turnover of Rs. 10Lac and not after 40 Lacs.

[AMARISH TIWARI]

Dear Mr.Raj kumar shukla,ANAND SHEMBEKAR & NEERAJ KUMAR, RANCHI,

I am very grateful to you for reply of my query on service tax threshold exemption

 

CA.AMARISH TIWARI

9827073629

BHOPAL

[rajkumar shukla]

welcome mr. Tiwari.I have checked up and found that I have mentioned wrong notfn. no.In fact  It is  6/2005 and 1/2006. To that extent, I would like to correct  myself.  Raj kumar shukla

AI Summary

Threshold calculation for small service provider exemption uses gross receipts before abatement, triggering liability when exceeded.
Calculation of the small service provider threshold exemption is based on gross receipts/payments received before any abatement; the provider becomes liable once gross receipts exceed the exemption limit, not when net value after abatement reaches that limit, and consecutive payments in a financial year are summed until the aggregate equals the exemption ceiling.