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s.tax applicabilitiy QUERY

11 October 2009

hiiii i have an query that when S.TAX is applicable, i.e. limit of 10lakh when applicabe? wether in every year or in the 1st year ? e.g.

2007-08 gross receipts 9.5 lac , so he got registrd u/s 69 as GR r exceeding 9 lacs.

2008-09 GR 12 lacs

2009-10 GR 8 lacs , pls tell me the amt of s.tax payble in these 3 years???

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16 Replies

Gautam Joshi (Partner) (361 Points)
Replied 11 October 2009

Hi Manish,

See the situation of last FY for knowing whether u will get the exemption limit or not.

For 09-10 - check the limit of 10 lakh that of FY 08-09 (in your case you are liable and pay on 2 lakh)

For 08-09 - check the limit of 10 lakh that of FY 07-08 (in your case not liable)

Limit of 10 lakh you can avail more than once. If you read the wordings of the notification word "any" financial year is used while availing benefit so government wants this benefit to be availed more than once for small service providers.

Please also not if you are a deemed service provider (a service receiver under reverse charge mechanism) than you are supposed to collect and pay from the very first rupee of your service receipt.

Warm Regards.

CA Manish Garg (CA ) (287 Points)
Replied 12 October 2009

thnks gautam 4 reply

as u said For 09-10 - check the limit of 10 lakh that of FY 08-09 (in your case you are liable and pay on 2 lakh" but in case of e.g. wch is given by me for f.y. 2009-10 S tax is paid on entire 8 lacs as GR of 2008-09 is exceeding 10lacs rupees .. m i right, pl s clarify ....

and wat about the registeration , is reg is required fot one time or every tym whn GR excced 10 lacs??

Gautam Joshi (Partner) (361 Points)
Replied 12 October 2009

Hi Manish,

To check the exemption applicability you need to consider previous year's turnover for sure.

Turnover of last year is crucial. “Threshold” means entry. Nowhere in the notification is mention made that of exist once you enter into Service Tax. Eventually, you may not even avail the benefit even once say for an example if turnover crosses more than exemption limit from the very first year you need to pay it till you exist in the market.

Gautam Joshi (Partner) (361 Points)
Replied 12 October 2009

Regarding Registration, it is one-time once it crosses 9 lakh Rs.

but obviously if you think in future your turnover is never going to cross 9 lakh than you may surrender it.

Its not advisable from my side as U and Me can never predict business so well. Right?

EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 12 October 2009

Originally posted by :manish garg
"	hiiii i have an query that when S.TAX is applicable, i.e. limit of 10lakh when applicabe? wether in every year or in the 1st year ? e.g. 2007-08 gross receipts 9.5 lac , so he got registrd u/s 69 as GR r exceeding 9 lacs. 2008-09 GR 12 lacs 2009-10 GR 8 lacs , pls tell me the amt of s.tax payble in these 3 years???	"

PLEASE NOTE Rs 10,00,000.00 TURNOVER IN A FINANCIAL YEAR IS THE BARRIER, AFTER CROSSING THE BARRIER YOU SHOUD BE REGISTERED WITH SERVICE TAX AUTHORITY

IF YOUR TURNOVER IS 12.00.000.00 YOU HAVE TO PAY SERVICE TAX ON Rs 2,00,000.00. THIS CONCEPT IS ABSOLUTELY WRONG

IF YOU COLLECT EVEN A RUPEE FROM YOUR CLIENT AS "SERVICE TAX" YOU ARE SUPPOSED TO PAY Rs 1.00 AS SERVICE TAX + CESS AS APPLICABE TO THE AUTHORITY

Rs 10,00,000.00 IS A BARRIER IMPOSED TO GIVE RELIEF TO THE SMALL ENTERPENURES.

Gautam Joshi (Partner) (361 Points)
Replied 13 October 2009

Hi Eklabya,

In this case, When I said only 2 Lakh is payable it means it is payable for that financial year.

When it comes to situation of next year, he is required to pay on 8 lakh.

otherwise I agree Threshold exemption is just an entry or in your way its barrier.

EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 13 October 2009

DEAR SIR

SERVICE TAX REGISTRATION SHOULD BE TAKEN, IF A SERVICE PROVIDER CROSSES THE BARRIER OF Rs 10,00,000.00 (TEN LAKH) TURNOVER FOR A FINANCIAL YEAR

SERVICE TAX REGISTRATION ON THE OTHER HAND COLLECTION AND PAYMENT OF SERVICE TAX IS SEPARATE ISSUE.

YOU CAN COLLECT SERVICE TAX IF YOU ARE REGISTERED WITH "SERVICE TAX CODE NO" FORM SERVICE TAX AUTHORITY.

IF YOU COLLECT ANY AMOUNT YOU HAVE TO PAY TO THE AUTHORITY. NO MATTER YOU FALL UNDER THE THE LIMIT OF 10,00,000.00 OR NOT

PLEASE NOTE IF YOU HAVE A TURNOVER OF Rs 12,00,000.00 (TWELVE LAKH) YOU WILL ONLY PAY FOR 2,00,000.00(TWO LAKH), THIS CONCEPT IS NOT JUSTIFIED

Gautam Joshi (Partner) (361 Points)
Replied 13 October 2009

Hi Eklabaya,

ST Registration is to be done once you cross 9 lakh Rs. and not 10 Lakh Rs.

The process of ST Applicability will start from Registration, than collection and will end at payment to government. You will agree with this right?

What Manish is asking about exemption of 10 lakh.

Suppose in his case if the first year's turnover is 12 lakh than he will avail exemption upto 10 lakh and pay on 2 Lakh Rs. What's wrong in this case?

Upto 10 Lakh a service provider is not supposed to collect and pay. I think you should check the provisions.

Sumit (Software Developer) (34 Points)
Replied 13 October 2009

Thanks for the information.

For additional information about payroll management system, please log on to this site the URL as below

https://www.sagarinfotech.com/Payroll.aspx

EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 13 October 2009

FROM WHERE YOU FIND THIS EXEMPTION THEORY PLEASE INFORM ME

AS FAR AS I KNOW WHEN "REGISTERED WITH SERVICE TAX AUTHORITY" YOU WILL COLLECT AND PAY

TO BE REGISTERED IS YOUR OPTION WITH THE TEN LAKH BARRIER. NOT NINE LAKH.

EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)
Replied 13 October 2009

Originally posted by :EKALABYA TALUKDAR

Gautam Joshi (Partner) (361 Points)
Replied 13 October 2009

Hi Eklabya,

Please understand one thing in Service Tax.

Exemption limit and Registration minimum limit is different since begining of Service Tax Literature.

9 Lakh Rs. limit is fixed for Small Scale Providers as per Notification No. 9/2008, dated 01-03-2008 which is an amendment of Notification No. 5/2007 dated 01-03-2007 in which value for registration was 7 Lakh Rs. Earlier in Notification No. 26/2005-ST dated 07-06-2005 the this limit was Rs. 3 Lakh. Please check this notifications on site www.servicetax.gov.in

If you still have any doubts.....always welcome.