Taxable Turnover of 50 lacs

[Vartik Choksi]

One of my clients (proprietor) had received indenting agent fees of Rs.27 lacs in FY 2011-12.  The service tax has not been paid on the said amount as we have fulfilled the prescribed conditions of Export of Service Rules, 2005.  Besides this fees, we have also received commission of Rs.25 lacs from parties located inIndia.  We have discharged the service tax on the accrual basis.  Thus total income for FY 2011-12 is Rs. 52 lacs.

Now to calculate aggregate value of taxable services of Rs. 50 lacs do I need to consider Rs. 27 lacs received towards export of services? 

Whether the payment of service tax would be shifted from the accrual basis to cash basis?

[devinder bagia]

Dear Vartik,

You need to include the value of export services for the calculation of aggregate vaue of taxable services turnover of 50 lakhs for the previous year. So in your case the payment would continue on accrual or payment basis whicher is earlier.The relevant notification says "aggregate value of taxable services".

This is because export services are otherwise taxable services, and by fulfiling the conditions of ESR, '05 they are to be exported without the payment of service tax. So, these are not non-taxable services per se. If you fail to satisfy the condition service tax becomes payable on them. 

CA Devinder Bagia

[email protected]

AI Summary

Aggregate taxable turnover includes export service receipts, and payment basis remains earlier of accrual or receipt. Aggregate taxable turnover includes value of export services even if exported under Export of Service Rules, 2005; such receipts remain taxable services and are counted toward the threshold. Payment timing continues on the earlier of accrual or payment basis, and failure to satisfy export conditions renders service tax payable on those receipts.