Sir, my friend is having a firm at hybderabad in the field of SUPPLY OF MAN POWER whose turn over is less than 50 lakh rupees. Does he requires to pay service tax. What is the exemption limit of turn over for such firms. Can he claim any abatement/refund.
thank you
Service tax registration is required to be taken when gross receipts are above 9,00,000 and you have to pay service tax when its above 10 lacs. As the firm is having turnover above 10 lacs. Service tax is required to be paid.
There is no abatement in the case of Manpower Supply.
Reverse charge scheme is applicable on manpower supply.
Dear Surya Prakash
If your friend's client is private or public limited company then your fiiend needs to raise an invoice with 25% ST and balance ST o f 75% will be paid by the client as a service receiver . all other cases he has to pay tax on the entire value . Since his turnver is less tha Rs 60 lakh he can pay the tax on receipt basis and not on accrual basis.
Agreed with Paramita. She covered all but one important Point:
For Individuals and firms providing any taxable service:
Since the aggregate value of taxable services is less than Rs. 50 Lacs (in the preceding year) the service provider has the option to pay service tax on receipt basis insted of accrual basis. (Proviso to Rule 6 of Service Tax Rules, 1994).
If in the current financial year, value exceeds Rs. 50 Lacs, pay taxes on accrual basis on excess.
Regards,
manoj
CAclubindia
