Manner of availing Threshold Exemption Limit

The tax liability for years 2005-06 to 2007-08 is NIL. The liability for 2008-09 is shall be 0.06 but the same will not arise in the year 2008-09. The liability will arise in the year of receipt of amount.

You are not eligible for small service provider exemption for 09-10. Your liability for 09-10 will be Rs. 0.06 [08-09] and Rs. 0.05 [09-10].

The service tax for 09-10 shall be claculated @ 10%. Hence the liability for 09-10 shall be 0.5 and not 0.05

The liability will arise only in year 09-10 as all the money is received in year 09-10. The liability will be (30-10) * 10.3% i.e. 2.06

The exemption to small service provider is available if the gross RECEIPTS during previous financial year exceeds the prescribed limit. i.e. for financial 08-09 - 10 lakh, for 07-08 - 8 lakh, for 06-07 & earlier years 4 lakh.

In the given case, full amount is received in 09-10. Hence, Rs 10 lakh exemption is available in that year 09-10. Every rupee thereafter is liable to service tax.

Hi Pramod,

Question asked by you is not that of registration but I like to put my view here is you should take registration in 08-09 itself as registration is applicable from 9 lakh. Regarding payment both the above friends are true.

Warm Regards.