Small service provider exemption for new services

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Arnab Datta (Querist)
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02 April 2013 If a service has been newly enacted as taxable service from 1-4-2013, what will be the value of taxable service provided in the preceding year.

Will it be nil as the service was not taxable?
If so, shall small service provider exemption of 10 lakhs be available in current year?

Please advice. Are there any service tax faq or notification regarding this?

CA Priti Surana

CA Priti Surana (Expert)
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03 April 2013 U will have to see date with effect from which the tax is applicable. There is no need to figure out the value of services for previous year as it was not taxable. Small service provider,s exemption starts from the date service became taxable. Let me know which service u r talking about. Probably i'll be able to suggest u better.

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Arnab Datta

Arnab Datta (Querist)
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03 April 2013 The tax is applicable from 1-4-2013 on the service. I am referring to air conditioned restaurants which was brought under service tax net recently.
Is there a notification or explanation of the department regarding this?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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25 July 2025 Here’s a clear answer for your query on **small service provider exemption** for services newly brought under service tax from 1-4-2013 (like air-conditioned restaurants):

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### 1. **Value of taxable services in preceding year**

* Since the service was **not taxable in the previous year**, the value of taxable service provided in the preceding year will be **considered as NIL** for the purpose of exemption threshold.

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### 2. **Eligibility for Small Service Provider (SSP) exemption**

* The **small service provider exemption limit of Rs. 10 lakhs** (threshold limit for service tax exemption) is available **from the date the service becomes taxable**.
* You do **not have to consider the turnover of that service in the previous year** (since it was not taxable then).
* So, if your turnover from the new taxable service (e.g., air-conditioned restaurant service) is below Rs. 10 lakhs in the current financial year, you can **claim exemption** from service tax.

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### 3. **Official clarification**

* There is no specific notification required to say this explicitly because this is a logical consequence of the law.
* Generally, the exemption applies to turnover in the current year for services taxable in that year.
* The Central Board of Excise & Customs (CBEC) Service Tax FAQs and Circulars support this view: The threshold limit applies to taxable services in the relevant financial year, not prior years when the service was not taxable.

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### **Summary**

| Aspect | Explanation |
| ---------------------------------- | --------------------------------------------------------- |
| Preceding year turnover of service | Considered NIL if service was not taxable then |
| SSP exemption limit | Rs. 10 lakhs from date service is taxable |
| Applicability | Yes, available if turnover < Rs. 10 lakhs in current year |
| Reference | CBEC circulars and general service tax rules |

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If you want, I can help you find exact CBEC circular or FAQ link for your reference. Would you like that?

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