Exemption availability on particular category or cumulative turnover

[Asked by Guest]

Dear Sir, I had a query regarding Service Tax on Immovable Property , As per Finance Act 2007 Service Tax has been Imposed on Service for renting of Immoveable Property w.e.f. 1st June 2007 : Our Company has rented our premises(Built up Area 2066 sq ft) to other Company @Rs 40 per sq ft Monthly Billing : Rs 82640 Billing from June 07 to March 08 : Rs 8,26,400/- Please advise on following : 1) Presently Our Company is registered with Service Tax under category as " Scientific and Technical Service¡" , Whether the Limit of 8,00,000/- turnover is relating to each particular service or cumulative turnover of all category of service provided by our Company. 2) Whether company will be required to charge service Tax on this transaction? 3) If Yes ? Whether Service Tax is to be charged after turnover of "Service on Immovable property¡" crosses 8 lacs or right from June 07. Thanks and Regards Prashant Bhole Thanks and Regards

1. The exemption limit of Rs.8.00 lakhs is to be considered on a cumulative basis i.e. for all the services rendered by you and not for service-wise. 2. Thus, the rent charged by you would attract service tax, provided if the same is rented out for use in the course of or in furtherance of business/commerce. 3. The service of renting of immovable property is made taxable from 1.6.07 only and till that time it is not taxable. Hence, the rent component for the months Apr and May’07 should not be taken into account for the purpose of calculating exemption limit of Rs.8 lakhs and only rent from June’07 to Mar’08 is to be considered. However, this exemption limit is applicable only where cumulative service charge receipts of all the services rendered has not crossed the Rs.8 lakhs limit and as indicated already, it is not applicable in your case.

Dear Mr. Prashant Bhole So far as your first question is concerned : The limit of Rs. 800000/- is for value of all taxable services provided in a financial year. (notification no. 06/2005-ST, dated 01-03-2005 read with notification no. 04/2007-ST, dated 01-03-2007) 2) For your second query :- Definitely you have to charge service tax from your client as it is indirect tax.Your client might be eligible for credit in accordance with the provision of CENVAT CREDIT RULES 2004. 3)Yes, you have to charge service tax right from june 07 itself. In case you don't charge it upto feb 08, you have to charge whole of service tax in March 08 (the month in which value of all taxable services cross 8 Lakhs) For any further clarification you may contact me at email mentioned above.

AI Summary

Exemption limit for service tax applies cumulatively across services, making rent of immovable property taxable from its effective date.
The service tax exemption threshold is applied cumulatively to all taxable services in a financial year. Renting of immovable property is taxable when used for business/commerce and became chargeable from 1 June 2007; receipts before that date are excluded from the threshold calculation. Service tax must be charged once cumulative taxable receipts exceed the exemption limit, recipients may claim CENVAT credit, and if tax was not collected earlier it must be accounted for in the month the threshold is crossed.