Need urgent help regarding my new sole company

299 views 2 replies

freelancerseo4all

Others

25 Points Joined June 2015

Hi Sir,

I registered my Sole Company in November 2014. Since then I did not get any Current Account. I had all my transactions in Savings account. Now that I have a Current account, I now want to know what should be my next step? I am Very afraid of High service tax of 14% ! Does this 14% tax apply to ALL my Incoming Cash in my Current Account? What about the money I transfer to different bank account to purchase something so that I can deliver the same to my clients? Will I be applicable to Service Tax also on the funds which are going out of my current account? Another advise I am looking for is since I will be starting depositing funds in my Current account from now, what happens? I have not done any service tax filing for year 2014- 1015....What will happens now? One CA told me that he will form another company in my wife's name and I can do transactions in that account...hence Tax liability will be less...but my question is HOW will it be less? Why will there be more service tax liability in my Company formed in Nov. 2014 when there was no transactions in my Current account as there was NO Current account? Hope I make sense?

Please help me ASAP... I am in real dialemma, what needs to be done? Please advise. I want solution to Save as much Service Tax as I can...is there any way to do this?

Regards,

Reuben

Replies (2)

CA Suri Kota

Assistant Manager @ EY

955 Points Joined November 2007

Hi,

First of all Service tax applicable of services you provide / invoices you raised on the customers. It has got nothing to do with incoming cash in either of accounts from Service tax point of view.

If you have incoming cash, you shuld be in a position to explain to IT Dept in case of any tax assessment.

As far as opening a sole firm in wife name gives you relief of serivce tax exemption on 10 lacs. So thereby you can bill the customers without service tax on 10 lacs of your limit and 10 lacs thru your wife's firm.

Thanks,

Suri

freelancerseo4all

Others

25 Points Joined June 2015

@ CA Suri Kota Sir, that means I am applicable to excemption from service tax till INR 10 Lac even if I do not open a sole firm in my wife's name? If that is the case then that mean's right now there is no need for me to open another sole as of now. Also sir, if I did not use my Sole firm till now, and also did not use my current account till now, and have not yet invoiced any of my customers till now, so that means I am not liable to pay any service tax yet. Right sir? This will be applicable once cash comes to my current account associated with my Sole firm. Right sir? Also sir, is it mandate to send invoice to my client's for my services? Suppose if someone does not want the invoicing? What then? I am so confused. My main concern is from November 2014 till date there has been zero transaction in my currrent account. If I start now the transactions this will be applicable henceforth right sir? Also apart from service tax,will there be income tax too on the amount I withdraw for my own personal use? Please guide me..

Regards,

Reuben