Service tax on receipt basis
This query is : Resolved
18 January 2015
As per Point of taxation rules,Individual and partnership firms are allowed to pay service tax on receipt basis upto value of Rs. 50 lacs only if the value of taxable services in previous financial year is Rs. 50 lacs or less.
My question is Whether the above rule of payment on recipt basis upto Rs. 50 lacs applicable to New business entity??
My question is Whether the above rule of payment on recipt basis upto Rs. 50 lacs applicable to New business entity??
18 January 2015
Relevant part of Rule 6 of the Service Tax Rules reads as follows
" Provided also that in case of individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received.
Hence new business entity upto 50 lakhs in the current FY can make payment on receipt basis.
" Provided also that in case of individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received.
Hence new business entity upto 50 lakhs in the current FY can make payment on receipt basis.
18 January 2015
As the new entity will not have any turnover in previous year, still the above rule applies to new entity?
24 July 2025
Yes, the rule **does apply to new business entities** as well.
Here’s why:
* The **point of taxation rule (Rule 6 of Service Tax Rules)** states that individuals and partnership firms can opt to pay service tax on **receipt basis** if their turnover in the **previous financial year** was up to Rs. 50 lakhs.
* For a **new entity**, there is **no turnover in the previous financial year** (effectively zero), which is less than Rs. 50 lakhs.
* Therefore, a new individual or partnership firm can **opt for payment of service tax on receipt basis** for the current financial year, up to an aggregate value of Rs. 50 lakhs taxable services.
**In summary:**
New entities automatically qualify for this option, since their previous year turnover is nil.
If you want, I can share the exact legal text or explain how to maintain compliance while using receipt basis payment. Want me to?
Here’s why:
* The **point of taxation rule (Rule 6 of Service Tax Rules)** states that individuals and partnership firms can opt to pay service tax on **receipt basis** if their turnover in the **previous financial year** was up to Rs. 50 lakhs.
* For a **new entity**, there is **no turnover in the previous financial year** (effectively zero), which is less than Rs. 50 lakhs.
* Therefore, a new individual or partnership firm can **opt for payment of service tax on receipt basis** for the current financial year, up to an aggregate value of Rs. 50 lakhs taxable services.
**In summary:**
New entities automatically qualify for this option, since their previous year turnover is nil.
If you want, I can share the exact legal text or explain how to maintain compliance while using receipt basis payment. Want me to?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Capital Gail Exemption Certificate
- Taxation of crypto futures in India Fy 2026- 2027
- MSME disclosure and disallowance
- EPF ECR NEW RULES Sep 17th 2026
- Transfer of Physical Stock Between Two Proprietorship Concerns
- Not ordinarily resident having partnership income in India and salary in USA is any form to filed be
- Accounting treatment of AMC alongwith the purchase of Laptop
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
