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Service tax exemption

CA.Varalakshmi.M (Manager-Finance) (482 Points)

15 May 2012

Hi Friends Please clarify my doubt.

In service tx rules to collect and pay service tax previous year taxable services should be taken into account.If previous yr we have less than 10 lakhs services we need not pay tax upto 10 lakhs services in current year

My doubt is

In first year I have taxable services of 8 lakhs

In second year 15 Lakhs so I need to pay tax on only 5 lakhs

In third year 8 Lakhs so I need to pay tax on 8 lakhs

In fourth year 12 lakhs

In fourth year can I avail basic exemption limit of 10 lakhs as third year services are less than 10 lakhs

Thanks in advance.

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4 Replies

Gururaj V Megharaj (IPCC) (70 Points)
Replied 15 May 2012

As per the rules, you cannot avail the exemption in 4th year.

Once you cross the limit of 10lacs then, ST will be charged from the next rupee i.e., after 10Lacs.

Eg: For the year your bill is 10,03,051. then ST should be charged only to 3051*10.3%.

However, This facility is available only once.

CA.Varalakshmi.M (Manager-Finance) (482 Points)
Replied 15 May 2012

Ok as you said we should avail service tax exemption of Rs.10 Lakhs only once in life time.once we crossed 10 lakhs in any year after that we should charge service tax on every rupee even though it isbelow 10 lakhs

Thank U

CA R MUTHURAJ (MANAGER - TAXATION) (32 Points)
Replied 15 May 2012

Yes. Mr.Gururaj & Ms.Varalakshmi told it absolute correct. But in the case Excise the Turnover criteria for Small Scale Exemption is based on the Previous Year and there by, based on your turnover the exemption will be determined.