Restaurant services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 June 2013 Sir,

While calculating the threshold limit of 10 Lacs for taking registration for Service Tax, which figure should i consider?
a) Is it the value on which service tax is charged @ 12.36% i.e. 40%of total sale value including service charge?
OR
b) Is it 100% i.e. total sales including service charge?

Please help.

GSTP Hari Dhayalan Konar

GSTP Hari Dhayalan Konar (Expert)
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25 June 2013 b is correct

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2013 Sir, With due respect i would again put forward some of my possible confusing points:
1) please refer the following link
https://www.caclubindia.com/experts/abatement-in-st-1099124.asp
2) “Aggregate value” [as defined in this notification itself] means the sum total of value of taxable services charged in the first consecutive invoices issued during a financial year but does not include value charged in invoices issued towards such services which are exempt from whole of service tax leviable thereon under section 66B of the said Finance Act under any other notification."

The above 2points are contradicting.
Please help me in this issue.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2013 Further please enlighten on the difference between abatement & exempted in details.. as i feel it is relevant

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2025 Great question! Let me break down the concepts clearly for you:

1. Threshold Limit for Service Tax Registration (10 Lakhs) — What Value to Consider?
Total sales including service charge (i.e., 100% of sales value) is to be considered for the threshold limit.

This means (b) — 100% of total sales including service charge is the correct answer.

2. Abatement vs Exemption in Service Tax
a) Abatement:
It means a part of the value of service is allowed as deduction before calculating service tax.

For example, in restaurant services, you pay service tax on only 40% of the total bill value (after abatement of 60%).

You are still liable to pay service tax on the remaining 40%.

Abatement is like a concession or rebate.

b) Exemption:
It means the service is fully exempted from service tax — no service tax is payable on the value.

Exempt services are completely out of the service tax net.

If service is exempted, it will not be included in your taxable turnover for the purpose of registration threshold or tax liability.

3. Your Confusion about Aggregate Value & Abatement
The aggregate value for threshold limit means the gross value of taxable services charged (after exemptions), before applying abatement.

So, you consider total sales (including service charge) for threshold limit, but the actual tax is calculated on value after abatement.

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