New small courier business within city limit

Service Tax is required to be paid on all services except those specified in the negative list of services. However, a small scale service provider has the option of availing service tax exemption in case the aggregate turnover value of taxable services does not exceed Rs 10 Lakhs in a financial year.

Therefore, if the aggregate value of services does not exceed Rs. 10 Lakhs in a financial year, the service provider can claim benefit of this service tax exemption and he won’t be required to pay any service tax on such services.

Although Service Tax is required to be paid only when the aggregate value of services provided exceeds Rs. 10 Lakhs in a financial year, the service tax provider is required to apply for Registration for Service Tax within 30 days of his turnover exceeding Rs. 9 Lakhs.

The service provider also has the option of not availing this exemption and can pay service tax irrespective of his total aggregate turnover. However, once the service provider starts paying service tax during any financial year, such option shall not be withdrawn during the remaining part of such financial year.

The concept of Service Tax Exemption was first introduced in the year 2005 vide Notification No. 6/2005 wherein aggregate services below Rs 4 Lakhs were exempted from service tax. This limit was increased to Rs 8 Lakhs in year 2007 vide Notification no 4/2007 and then increased to Rs 10 Lakhs in year 2008 vide Notification No 8/2008.