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Query of stax and law

(Guest)

Q :Is there any amendment in law for nov 2012 i hve may 2012 munish bhandhari book?

stax ipcc

exemption to small scale service provider

Q : Arish provides service in 1st year for 15 lakhs

2nd year for 10 lakhs

3rd year for 11laks

whether arish can claim exemption on services in 2nd and 3rd year ?

If, yes then how much in each year?

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15 Replies

Durga (student ) (424 Points)
Replied 06 October 2012

i hope my answer is right ..

a small service provider is a person whose pr.yr turnover does not exceed rs.9 lakhs .

in this case , he is eligible to get an exemption of rs. 10,00,000 evry year .

in your exampls ,

1st yr turnover - 15,00,000

- exemption - 10,00,000

taxable service - 5,00,000

service tax @ 12.36% on 5,00,000 - 61,800 .

for the next two yrs , no exemption limit of 10,00,000 is allowed . since the 1st year turnover exceeds 10,00,000 , the person must for go for compulsory registration .

for 2nd yr whole 10 lakhs and 3rd yr 11 lakhs are fuly taxable at 12.36 %

correct me if am wrong ....

(Guest)

I THINK UR RITE

IS THERE ANY AMENDMENT FOR NOV 2012 LAW EXM?

Sanjay S (Chartered Accountant) (1375 Points)
Replied 06 October 2012

According to Me, i think the answer is this:

A small service provider is an assessee whose value of taxable services rendered in the previous year is less than 10lakhs. For such a person, in the current year, Service tax is payable only on the value of services exceeding 10 lakhs ( which in effect means he gets an exemption of 10lakhs).

In the instant case,

In the 1st year, since he just started service ( assumption) .. the whole of the value of service of 15lakhs is taxable from the very first rupee... There is no question of him being a small service provider.

In the 2nd year, the previous year's (1st year) value of services exceeds 10lakhs.. Hence he's not a small service provider... which means the complete current year value of services of 10lakhs is taxable.

In the 3rd year, the prev year's (2nd year) value of service does not exceed 10lakhs.. so he is a small service provider. hence in the 3rd year only the value in excess of 10 lakhs is taxable. This works out to a taxable value of service of 1 lakh in the 3rd year.

However, i think this concept of small service provider is not included in the May 12 and Nov 12 IPCC syllabus anymore.. Please confirm this...

I have attached a file belonging to CA Raj K Agarwal regarding the amendments applicable for NOv12..

Hope I helped...

Attached File : 886703 1067256 amendment for nov 2012 exam.pdf downloaded: 138 times

Josmin Jose (CS ) (47 Points)
Replied 06 October 2012

Dear all i have a doubt

Issue of shares in DEMAT Form - In the case of Listed Companies, is it mandatory or not.
Please clarify my doubt with proof

CA.Ganesh (Practicing Chartered Accountant) (308 Points)
Replied 06 October 2012

@ varsha nayyar

Eligiblity to claim Exemption to Small Service Providers has to be checked each year seperately based on the value of taxable turnover.

In your case , 3 rd year also can claim exemption upto 10 L since 2nd year value of taxable turnover didnt exceed 10 Lakh

Durga (student ) (424 Points)
Replied 06 October 2012

@ sanjay s - if a small service provider gets registered under service tax act , he has to pay tax through out the life time unless and untill the company or firm gets dissolved . then how can he claim exemption in the third yr ??? here we should not see the third year turnover since the firm has to go for mandatory registration and hence the full service becomes taxable in his hands ..

the concept of small service provider is very well applicable for nov 12 exam .

CA.Ganesh (Practicing Chartered Accountant) (308 Points)
Replied 07 October 2012

Originally posted by : Durga
	@ sanjay s - if a small service provider gets registered under service tax act , he has to pay tax through out the life time unless and untill the company or firm gets dissolved . then how can he claim exemption in the third yr ??? here we should not see the third year turnover since the firm has to go for mandatory registration and hence the full service becomes taxable in his hands .. the concept of small service provider is very well applicable for nov 12 exam .

I agree with above

Sanjay S (Chartered Accountant) (1375 Points)
Replied 07 October 2012

@ Durga

You're absolutely right about that point..

But in the 2nd year the value of services is less than 10laks,which means he acquires the eligibility for opting the small service provider scheme in the 3rd year..

But like you said, he was required to do mandatory registration in the 1st year itself.. and once he does this he has to pay full tax.

One way to go around this issue and get an exemption of Rs. 10lakhs in the 3rd year is:

CANCEL the registration and APPLY for the SSP scheme.

Once he does this, he has to pay Service tax on only such amount exceeding Rs. 10lakhs in the 3rd year..

This is how my answer was arrived at..

Sanjay S (Chartered Accountant) (1375 Points)
Replied 07 October 2012

@ Josmin Jose

Dematerialisation is not mandatory for pvt ltd company but it is mandatory for public ltd company whether listed or not.

I dont know about the proof.. But you can take a look at this Thread involving Experts:

/forum/demat-of-shares-192869.asp

Durga (student ) (424 Points)
Replied 07 October 2012

i agree with the 10 lakhs part ..

i have referred with a well known faculty service tax .. he too expresses the view that the assesse must pay the service tax for the 2nd and 3rd yr . exemption cancellation of registration is allowed one and only when the the assesse chooses to close down the business . other wise the assesse once registered is registered .

Sanjay S (Chartered Accountant) (1375 Points)
Replied 08 October 2012

Okay... i guess you're right on that one...

Then your answer prevails ... [-- No exemptions in 3rd year --]

..My apologies..

CA.Ganesh (Practicing Chartered Accountant) (308 Points)
Replied 09 October 2012

@ durga

what is conclusion ?

CA.Ganesh (Practicing Chartered Accountant) (308 Points)
Replied 10 October 2012

Though assessee is registered, he can claim exemption of SSP

Durga (student ) (424 Points)
Replied 10 October 2012

Originally posted by : ganesh
	Though assessee is registered, he can claim exemption of SSP

he cannot claim exemption in the 2nd and 3rd yr yaar .. thats the ans .. . when the assesse becomes registered he cannot fall under the category of SSP . hense service tax should be paid on taxable turnover .