16 February 2015
1) On what amount the service tax is payable after registration? If the gross receipts are say Rs. 12,00,000/-, whether the service tax is payable on Rs. 12,00,000/- less basic exemption Rs. 10,00,000/- or on the complete amount i.e. Rs. 12,00,000/-?
2)if subsequently the gross receipts have dropped below Rs. 10,00,000/-, can we again claim the basic exemption of Rs. 10,00,000/- and not charge/deposit service tax and also, not file the return?
3) if the registration is under business auxiliary services but the receipts are from different heads like Commission (TDS u/s 194H deducted), REnt (TDS u/s 194I deducted), Professional fees (TDS u/s 194J decuted) and Contract (TDS u/s 194C deducted). and receipts under each head are below Rs. 10,00,000/-, then can basic exemption of Rs. 10,00,000/- can be claimed for each head of income and service tax can be saved?
Please advice me on the above points as the matter is urgent.
16 February 2015
1)Service tax is payable on 12lakh-Basic exemption limit i.e on amount that exceed Rs.10 Lakh.
2)No,in subsequent year it cannot be Claimed. Basic exemption limit can be claimed in the subsequent year only if the previos years ie 1st year receipt has not exceeded Rs.10 Lakhs.
3)No, this limit is for all services by the service provider from all the locations.
Regards
Querist :
Anonymous
Querist :
Anonymous
(Querist)
18 February 2015
Thank you so much CA Anjana Grover for a prompt reply, but still 2 things remain unclear. I would appreciate if you could throw some light on the same.
1. As I mentioned in point 2 of my query, now putting it differently, if I had received/billed for an amount exceeding 10 lacs in a year but in subsequent year, I fail to generate any business and my total receipts/billing in the subsequent years are around say 2 lacs, which makes me not taxable under income tax act, will I still be liable to pay service tax?
2. As mentioned in para 3 of my query, I have registration under business auxillary services, but my receipts are from Professional, Rent, Commission & Contractual, which are independently taxable under service tax act and have separate service code, and I have not taken a service tax code from the service tax department for these services. Also, in each service, my receipts are below 10 lacs every year, should I be declaring these income in my service tax return, without a service code allotted, and
if a notice is issued to me under the pretext third party information from higher formation and mismatch between Income tax and service tax records, while I have not filed any service tax return and my Income tax returns are clearly showing receipts from each source separately, how the service tax department is claiming a mismatch and what does this third party thing mean.
I would be grateful if you could help me out in the matter, as how I should present my case and save myself from any penalty etc. the department is asking for last 5 years records and genuinely I had no intention of hiding anything from the department but had a view that as my income separately are below 10 lacs each for services not registered with service tax department, i need not file the return, as I have not claimed any service tax also from my clients.
Please help me out.
Thanks in advance and best regards.... Waiting for your response & guidance...
Querist :
Anonymous
Querist :
Anonymous
(Querist)
18 February 2015
Thank you so much CA Anjana Grover for a prompt reply, but still 2 things remain unclear. I would appreciate if you could throw some light on the same.
1. As I mentioned in point 2 of my query, now putting it differently, if I had received/billed for an amount exceeding 10 lacs in a year but in subsequent year, I fail to generate any business and my total receipts/billing in the subsequent years are around say 2 lacs, which makes me not taxable under income tax act, will I still be liable to pay service tax?
2. As mentioned in para 3 of my query, I have registration under business auxillary services, but my receipts are from Professional, Rent, Commission & Contractual, which are independently taxable under service tax act and have separate service code, and I have not taken a service tax code from the service tax department for these services. Also, in each service, my receipts are below 10 lacs every year, should I be declaring these income in my service tax return, without a service code allotted, and
if a notice is issued to me under the pretext third party information from higher formation and mismatch between Income tax and service tax records, while I have not filed any service tax return and my Income tax returns are clearly showing receipts from each source separately, how the service tax department is claiming a mismatch and what does this third party thing mean.
I would be grateful if you could help me out in the matter, as how I should present my case and save myself from any penalty etc. the department is asking for last 5 years records and genuinely I had no intention of hiding anything from the department but had a view that as my income separately are below 10 lacs each for services not registered with service tax department, i need not file the return, as I have not claimed any service tax also from my clients.
Please help me out.
Thanks in advance and best regards.... Waiting for your response & guidance...
18 February 2015
Reply to Query 1: You should pay Service Tax on Rs. 2 Lakhs (12 Lakhs Gross Receipts-10 Lakhs Basic exemption)
Reply to Query 2: If in next year you gross receipt is less than 10 lakhs, you have to pay Service Tax on every single amount you received. Because basic for claim basic exemption the previous year taxable turnover must be less than 10 Lakhs.
Reply to Query 3: If you are receiving amount under different heads then you can claim exemption of Rs. 10 lakhs in total for all heads.
1)If the billing crosses Rs.10 Lakhs in any of the Previous year (Starting from the 1st Year) than you would be liable to pay service tax in subsequent year also even if amount of billing is just Rs.100 or Rs.11 Lakhs.
2)You should have applied for amendment in certificate of registration of Service tax if services like rent , professional Income was not covered earlier at the time of getting the registration done for Business Auxiliary Services.
Two different limits would have been assigned if the same are provided under two different Persons.(As per language of Law a person can be Individual,Company, HUF, Partnership firm etc.)& separate banks & other accounts are maintained for the same.
Now you have to check in which category of Point 2 you fall & accordingly reply to the department to convince them.
CAclubindia
