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What if service tax will liable on 11th month onward

Indiatrainer (Head) (61 Points)

04 February 2014

Every month my business was less than 50K, so I thought of not charging ST from my clients, as the projected business was less than 10L thus in exempted limit. Now suddenly on 11th month and onward I am hoping for big business, and would easily cross 10 L limit. If I charge ST now onward, will there be any issue? (as I said I have never charged ST as of now from my clients). Will the department ask about ST for all the previous businesses in the financial year? So what should I do ?

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5 Replies

Manoj Chaitanya Varma (1) (61 Points)
Replied 04 February 2014

till now u have not collected service tax your turnover exceeds 10laks, the ST department assumes that bill u raised is inclusive of serivce tax. so u have to pay service tax @ 12.36% if the turnover exceeds 10lakhs

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 04 February 2014

If this is first year of your business, then you will be called as SSP (Small Service Provider), then you have to pay tax if your turnover exceeds Rs. 10 lac only on above Rs 10 lac.

And if this is not first year then if your last year business turnover upto Rs. 10 lac, then you are also eligible to take the benefit of SSP. and so you have to pay the tax on exceeds Rs 10 lac only @ 12.36%.

Indiatrainer (Head) (61 Points)
Replied 05 February 2014

Originally posted by : Arif Ali
	If this is first year of your business, then you will be called as SSP (Small Service Provider), then you have to pay tax if your turnover exceeds Rs. 10 lac only on above Rs 10 lac. And if this is not first year then if your last year business turnover upto Rs. 10 lac, then you are also eligible to take the benefit of SSP. and so you have to pay the tax on exceeds Rs 10 lac only @ 12.36%.

Last year it was around 7L. So as per you, I should deduct ST only in 11th and 12th month, without compensating for the previous months in which I did not charged ST (from 1 to 10th month my project business was less than 7L). Right?

Ashok (Owner) (29 Points)
Replied 05 February 2014

What would be the advise in situation where revenue threshold is uncertain like above (that is may or may not cross 10Lac) - does one get service tax number and start collecting ST from month 1 - and depending on year end gross income decide tax is payable or not. Any harm when one has collected but did not have to pay (refund to client may not be possible due to multiple client etc).

Manoj Chaitanya Varma (1) (61 Points)
Replied 06 February 2014

once you are liable to pay service tax then you have to pay service tax regularly, i.e by 5th of next month. u asked about collecting service tax from customers and not paying to govt- as long as the st authorities wont come to your place you can enjoy but once they find you means saying you are not paying service tax then you have to pay interest on ST, Fine on ST and Penality on ST. its better to pay original st instead of paying interest, fine, penality within due date.