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Sevice tax exemption :reg.

dinesh bhatia (individual (tax payer)) (35 Points)

25 April 2016

PROPERTY WAS RENTED OUT FOR COMMERCIAL PURPOSE ON 01/04/2014 FOR A MONTHLY RENT OF RS. 1,15,000/-. AFTER CROSSING THE A LIMIT OF RS. 10 LAKHS. I GET MYSELF REGISTERED WITH SERVICE TAX DEPARTMENT. PAYING SERVICE TAX AT APPLICABLE RATES TO THE DEPARTMENT AND ALSO FILING MY RETURNS ACCORDINGLY. NOW, WE HAVE REDUCED THE RENT OF THE SAID PROPERTY, DUE THE THE DOWNFALL IN THE MARKET, FROM RS. 1,15,00/- TO 80,000/- PER MONTH w.e.f. 01/04/2016. MY QUERY IS WHETHER I AM EXEMPTED FROM PAYING THE SERVICE TAX BECAUSE IN THIS FINANCIAL YEAR LIMIT OF RS. 10 LAKHS WILL NOT CROSS THOUGH THE PREVIOUS YEAR'S RENT WAS MORE THAN 10 LAKHS. IF I AM EXEMPTED FROM THE SAME PLEASE INFORM ME THE RELEVANT NOTIFICATION NO. AND DATE. THANKS WITH REGARDS DINESH BHATIA

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6 Replies

Prashant Hegde (Professional) (262 Points)
Replied 25 April 2016

Exemption Rs.10 lakh is applicable only for the 1st year. Since last year you have crossed the limit so this is tax is applicable from Re.1 itself.

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Kaushik Joshi (Practising Chartered Accountant) (1527 Points)
Replied 25 April 2016

I agree with Prashant Hedge too. For verifying applicability of service tax you've to check the turnover of preceding financial year. since in preceding f.y. you've crossed the limit, you have to levy s.t.

dinesh bhatia (individual (tax payer)) (35 Points)
Replied 26 April 2016

MR. PRASHANT HEDGE AND MR.KAUSHIK JOSHI MANY MANY THANKS FOR YOUR PROMPT, EARLY AND VALUABLE ADVICE TO MY QUERY.

NOW ONE MORE QUERY ARISE FOR THE SAME PLEASE ADVICE ME.

QUERY IS: IF IN PRECEDING FINANCIAL YEAR TURNOVER IS LESS THAN 10 LAKH AND ALSO IN THE CURRENT FINANCIAL YEAR TURNOVER IS LESS THAN 10 LAKH......INTHIS CASE WHAT WILL BE SERVICE TAX LAIBILTY IS THERE ANY SERVICE TAX OR NOT

THANKS

WITH REGARD

DINESH BHATIA

Kaushik Joshi (Practising Chartered Accountant) (1527 Points)
Replied 26 April 2016

Dear Dinesh Bhatia,
Yes in the case of new scenario, no service tax is to be charged up to the threshold limit. also, please note that if you have a service tax regn no. then, you'll have to file st returns too.

Prashant Hegde (Professional) (262 Points)
Replied 26 April 2016

Agree with kaushik, As per the 2 query there is no tax for both the year. Until you cross 10lakh, situation will be the same. But in ST return you have to show service amount and in that you have to claim exemption under notification no. 33/2012.

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Mir Irshad Ali (Partner) (192 Points)
Replied 26 April 2016

Small Scale Exemption in Service Tax is provided under Notfn No. 33/2012-S.T.

Basic requirement is that the Taxable value for preceeding financial year should be less than Rs. 10 Lakhs. If-

2014-15 - 8 lakhs - No Tax upto 10 lakhs if turnover for 2013-14 was below 10 lakhs

2015-16 - 12 lakhs - No Tax upto 10 lakhs. Tax payable on remaining 2 lakhs.

2016-17 - 7 lakhs - Tax payable on total amount of 7 lakhs.

2017-18 - 7 lakhs - No Tax (upto 10 lakhs) as turnover for 2016-17 was below 10 lakhs