Service tax exemption

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Kathiravan Venkatesan

10 Points Posted on 18 October 2016

Hi,

I have Incorporated my startup as Pvt limited company at chennai in Feb 2016. No financial tramsactions done so far and filed nill income tax. I am developing a SAAS product (software as a service) to retailers. I am thinking to provide free subscriptttion initially after collecting a one time license fee/ registration fees around Rs.5000 by way of cash/cheque. My questions are below

1. What kind of taxes should I collect from the retailer for this payment.

2. If it is service tax, will I get exemption till 10 lakh limit per year. In that case I hope I don't need to do service tax registration

3. Should i mention the service tax exemption in the invoice or payment receipt? If yes how?

Thanks in advance

Replies (2)

Mahendra

Chartered Accountant

154 Points Posted on 18 October 2016

In case of Software license fees : either service tax or vat will be applicable depending upon the satifisaction of condition applicable for service tax or vat. You have to consult your CA before applying the correct tax.

In case if it is a service and liable for service tax, then you can take an exemption, however if your company is providing such service under any brand or trade name (whether registered or not), then such exemption will not be available.

If such threshold exemption is available, then there is no need to mentioned in the invoice or receipts, since there is no such requirement as per law.