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Service tax exemption

Madhukar (self) (25 Points)

04 April 2012

Hi All,

My question is regarding limit on exemption of servive tax.

Annual income from renting out immovable property exceeds 10lakhs. As i understand service tax is applicable for this. Can you please clarify if service tax is exempted on the first 10 lakhs of income ?

Thanks in advance

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13 Replies

CA Sripal Jain (Associate Finance) (709 Points)
Replied 04 April 2012

yup u need not pay service tax if it doesn crosses 10 lakhs

regards

sripal jain

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 04 April 2012

Yes...service tax is applicable on Service provided > 10 Lakhs.

Hence, in your case, you need to pay service tax.

Regards

Prateek

ANANTHANARAYANAN P V (SR MANAGER - TAXATION) (32 Points)
Replied 05 April 2012

Dear Madhukar,

You need not pay service tax as long as your taxable service in the preceeding financial year does not exceed Rs.10 lakhs. Apart from renting of immovable properties, if you provide any other taxable service and the aggregate value exceeds Rs.10 lakhs, then you have to pay service tax. In such a scenario, you can avail exemption on the first Rs.10 lakhs. I.e. if your aggregate value of taxable service is, say, Rs.11,50,000/-, you can avail exemption on Rs.10 lakhs and pay service tax on the balance Rs.1.50 lakhs. For subsequent years, you have to pay service tax on the entire taxable service provided (there will be no exemption of Rs.10 lakhs).

Ananthanarayanan. P. V.

RENGARAJ R.K (ADVOCATE) (7557 Points)
Replied 05 April 2012

Actually, when the income touches 9 lacs in the financial year you should apply for the service tax registration (online) and after crossing or availing the first 10 lacs threshold limit, you have to pay service tax (now it is 12.36%) to the Department. Next year there is no exemption.

Please note that if the immovable property is used for the following purpose then it is excluded from the scope of service tax.

residential properties
residential accomodation such as hostels, boarding house.

rengaraj r.k

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 05 April 2012

YES agree with above... when the income touches 9 lacs in the financial year you should apply for the service tax registration (online) and after crossing or availing the first 10 lacs threshold limit, you have to pay service tax (now it is 12.36%) to the Department. Next year there is no exemption.

AMIT VERMA (Accountant) (33 Points)
Replied 06 April 2012

Dear All,

Plz help in the below said 2 Cases

Case - 1

if the income touches Only 9 lacs in the Consecutive 3 financial year... should we apply for the service tax registration or should we File return in 2nd F.Y or not.

Case - 2

if the income remain Only 9 lacs in the 1st FY & 10 lacs in 2nd FY & again 9 Laca in the 3rd FY... what sould be the treatment of filing the return for this vary particular case....

Your valued response will be highly appreciated......

faij (accountant) (22 Points)
Replied 06 April 2012

Dear Sir,

What is service tax rate For Hotel Industry from april-2012 ?

thanks

faij-ahamad

ANANTHANARAYANAN P V (SR MANAGER - TAXATION) (32 Points)
Replied 06 April 2012

Dear Amit Varma,

The answers to your queries are given below:

1. The exemtion limit of Rs.10 lakhs is per financial year. If the aggregate limit crosses the limit of Rs.9 lakhs, the service provider has to get himself registered, but need not pay any service tax since the threshold limit is Rs. 01 lakhs. He can file a NIL return, for having registered.

2. When the income in the first year is Rs.9 lakhs, second year is Rs.10 lakhs and again it is Rs.9 lakhs in the third year, you have to file NIL returns for the second and third year, since you would have applied for service tax registration the moment your turnover corssed Rs.9 lakhs in the second year.

The words used in the Exemption Notification No.6/2005-ST dated 01.3.2005 is "...... hereby exempts taxable services of aggregate value NOT EXCEEDING ........." So, upto Rs.10 lakhs you can claim exemption, per financial year. Once it crosses Rs.10 lakhs, you have to start paying service tax and file the returns accordingly.

Ananthanarayanan. P. V.

1 Like

CA Sripal Jain (Associate Finance) (709 Points)
Replied 16 April 2012

guys why do u complicate things,he just askd whthr he is liable to pay tax,and the answer is no thts it,he dint ask abt registration and all...so bettr avoid perplexion in answers

regards

sripal jain

1 Like

ganesh (a/c) (21 Points)
Replied 19 April 2012

hai

i want to know that weather 3 Wheeler auto repairs & service for an authorised Dealer is exempted for the year2012-13

and kindly send the link also

Please

Ganesh

Accountant

Ashok kumar Degala (Manager-taxation) (21 Points)
Replied 11 June 2012

As an Authorised dealership for 3 wheeler it is purely exempted from service tax

kamlesh (prop) (39 Points)
Replied 08 July 2015

Hi All, Wanted to know that if I am taking residential property on rent and yearly rent is more then 10 lac.. So do I need to pay service tax? If the same property of I sub lease to college students for residential purpose for one year and I am charging rent less then 1000 per day then do I need to charge service tax from them? Please let me know ... Thanks

ananthapadmanaban (CA Practice ) (39 Points)
Replied 25 August 2015

No one has answered the important point in the questiuon; If the value of service in the FIRST YEAR exceeds 10 lakhs, say 11 lakhs, whether to pay tax on the entire service value of 11 lakhs, OR THE EXCESS OVER 10 LAKHS ? i.e one lakh only Well this is applicable in the FIRST YEAR alone. Because nowhere in the Act, it is mentioned as BASIC exemption .and it is a concession for Small and Medium enterprises.