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

Export Fees Must Be Included in Taxable Turnover; Payment Basis Remains on Accrual as per Service Rules 2005. A client received Rs. 27 lakhs as indenting agent fees for export services and Rs. 25 lakhs as commission from domestic parties in FY 2011-12, totaling Rs. 52 lakhs. The client did not pay service tax on the export fees, claiming compliance with Export of Service Rules, 2005. A query was raised about whether the export fees should be included in calculating the aggregate taxable services turnover of Rs. 50 lakhs and if the tax payment basis should shift from accrual to cash. The response clarified that export services must be included in the taxable turnover calculation, and payment remains on an accrual basis.