What are the conditions of exemption to small scale service

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RAHUL KUMAR TAANK

RAHUL KUMAR TAANK (Querist)
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15 December 2010 DEAR SIR,

What are the conditions of exemption to small scale service providers?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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15 December 2010 please noted that taxable services provided by the small scale service provider were exempted from whole of service tax leviable there-on upto the aggregate taxable value Rs.4 lakhs in any financial year of vide Notification No.06/2005-ST dated 01.03.2005 (effective from 01.04.2005). The exemption limit of aggregate taxable was enhanced to Rs.8 lakhs vide Notification No.4/2007-ST dated 01.03.2007 (effective from 01.04.2007) and the same has been further enhanced to Rs.10 lakhs vide Notification No.8/ 2008-ST dated 01.03.2008 (effective from 01.04.2008).
(i) Above exemption is not admissible to :-
(a) taxable service provided by a person under a brand name or trade name, whether registered or not, of another person or
(b) such value of taxable services in respect of which service tax shall be paid by recipient of service under section 68 (2) of Finance Act read with Service Tax Rules, 1994.
(ii) Above exemption is admissible subject to following conditions:-
(a) taxable service provider has the option not to avail the said exemption and pay service tax on the taxable service and such option are exercised in a financial year shall not be withdrawn during the remaining part of such financial year ;
(b) the provider of taxable service shall not avail Cenvat credit of service tax paid on any input used for providing taxable service on which exemption of small scale is availed.
(c) The provider of taxable service shall not avail Cenvat credit under Rule 3 of the Cenvat Credit Rules 2004, during the period in which the service provider avail small scale exemption.
(d) The provider taxable service shall avail CENVAT Credit only on such inputs or input services received on or after the date on which the service provider starts paying service tax and used for provision of taxable services on which service tax is payable.
(e) The provider of taxable service shall be required to pay an amount equivalent to the CENVAT credit taken by him, if any, in respect of such inputs lying in stock or in process on the date on which he starts availing exemption under this notification.
(f) The balance CENVAT Credit lying unutilized if any after the adjustment of credit under
(e) above, shall lapse on the day such service provider starts availing the exemption under this notification.
(g) This notification shall apply to the aggregate value of one or more taxable services provided from one or more premises and not separately for each premises or each service.
(h) The aggregate value of taxable services rendered by a provider of such service from one or more premises does not exceed exemption limit fixed (i.e. Rs.Ten lakhs) in the proceeding financial year.

Regards,

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