Exemption limit availability

[Chalapathy Rao Marthy]

Dear Sir, My client is getting annual rental income of Rs 9.30 Lakhs from commercial establishments. My query is from when the exemption limit of Rs 10 lakhs comes into effect.

In your case,your client would be paying service tax for the fy 2007-08 as it crosses Rs.8 lakhs limit. The limit of Rs.10.00 lakhs comse into effect from 1.4.08 and thus fy 2008-09, he can opt for small service provider exemption.

AI Summary

Service tax exemption threshold increased; small service provider exemption applies from the next fiscal year when turnover exceeds previous limit.
Change in the service tax exemption threshold to Rs.10 lakh is effective from 1.4.2008, so taxable status is determined by the threshold applicable to the relevant fiscal year. A provider with annual rental receipts of Rs.9.30 lakhs was liable for fiscal year 2007-08 under the earlier Rs.8 lakh threshold, but may claim the small service provider exemption from fiscal year 2008-09 if turnover is below the new limit.