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Service tax

megha (CS, executive) (30 Points)

16 January 2013

when does a small service provider require to register under the service tax act, but not liable to collect and pay sevice tax?

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8 Replies

Ankit (CA, CS) (3064 Points)
Replied 16 January 2013

Dear Megha,

Registration is required once the value of services provided exceeds Rs. 900000. and payment is required after the value exceeds 1000000.

so, between these amounts, regn is required but collection and payment is not required

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Ankit (CA, CS) (3064 Points)
Replied 16 January 2013

you are welcome.

hope it was clear..

Ankit

Dhanesh Agarwal ( ) (70 Points)
Replied 16 January 2013

Megha,

Under the new service tax, when value of Taxable services during the Financial Year Exceed exceed Rs. 9,00,000/-, then service provider is required to get registered under service tax.

for taxablity under service tax turnover of previous financial year (PY) is being considered,

If PY turnover exceed Rs. 10,00,000/- ,then in Current year Service tax will be charged on whole value. i.e. no exemption will be given

& If PY turnover did not exceed Rs 10,00,000/-, then in Current year upto Rs. 10,00,000/- no service tax will be charged & on above than 10,00,000/- service tax will be charged @ prevailling rate.

* Here it is important that

Turnover means value of taxable services.

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megha (CS, executive) (30 Points)
Replied 16 January 2013

one more question sir..... a dealer purchased goods for rs. 2,00,000 and after adding expenses of rs. 10,000 and profit of rs. 25000 had sold out the same...... how to compute the invoice value to be charged and amount of tax payable under VAT.

Dhanesh Agarwal ( ) (70 Points)
Replied 16 January 2013

Ist of all there are three method for computation of VAT:-

The subtraction method
The addition method
Tax credit method (or Invoice Method)

The subtraction method:- Under the method the tax rate is applied to the difference between the value ofoutput and the cost of input;

The addition method:- Under this method value addes is computed by adding all the payments that are payable to the factors of production(wages,salaries, interest,payments, etc.);
Tax credit method(or Invoice Method)- Under this method, it entails set-off of the tax paid on inputs from tax collected on sales,indianstates opted for tax credit method, which is similar to cenvat.