On which value threshold exemption will be available

[Rajesh Sharma]

Sir, My question is that, a Bar restaurant is providing taxable services, they did business of Rs.30.00 lacs in the last financial year 2011-12. How they will calculate their taxable value while getting the benefit of threshold exemption of Rs.10.00 lacs :-

(i) whether first they have to less (Rs.30.00 lacs - 10.00 lacs) from Rs.30.00 and then on remaining Rs.20.00 lacs they have to pay service tax on the abated value i.e. on Rs.9.00 lacs, as abatement is 70%)

(ii) or they have to calculate their taxable value taking into consideration of abatement i.e. (after abatement of 70%, taxable value on Rs.30.00 lac will be 9.00 lacs) and thus they will be exempted from service tax.

Waiting for your reply.

[CASeetharaman KC]

Threshold exemption is available on the gross value i e 30 Lakhs and tax shall be payable on the balance amount of Rs 20 Lakhs, Tax would however be payable on the net taxable value after availing the abatement as per the abatement notification

[Rajesh Sharma]

Thannk you sir for your kind reply. I am also of the same view, but some people think the option (ii) should be adopted.

[NANDKUMAR SAGWEKAR]

Services by Hotel having facility of airconditioning and licence to serve alcoholic beverages , the services are taxable w.e.f. 01/05/2011. You have to see the  taxable portion , SSP exemption etc in two different contex of period

 

01/05/2011 to 30/06/2011

01/07/2012 till date

Also to see the explanation given in respective SSP exemption notification about ' agreegate value'

 

Thanks

 

ANAND SHEMBEAKR

CELL 942118711

 

AI Summary

Clarification on Service Tax: Exemption Applies to Gross Value, Tax on Net Value After Abatement A discussion on a forum addresses the calculation of taxable value for a bar restaurant eligible for a service tax threshold exemption of Rs. 10.00 lakhs. The query involves whether to deduct Rs. 10.00 lakhs from the total Rs. 30.00 lakhs first and then apply the abatement, or to apply the abatement first and then consider the exemption. A Chartered Accountant clarifies that the exemption applies to the gross value, and tax is payable on the net taxable value after abatement. Another participant highlights the importance of considering different periods and the SSP exemption notification.