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Service tax obligation for a manpower supplier

02 January 2016

I've started a Manpower Supplier consultancy primarily for the informal labour market. I need to know whether I should quote ST from my clients. In that case, service tax registration is compulsory. But, what if my annual revenues doesn't cross Rs 10 lacs ? What about the service tax that has been collected from various clients ? Please guide me

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Ronak (Partner) (24 Points)
Replied 02 January 2016

Avigyan

As you have started a Manpower Supplier consultancy, the said service is a taxable service.

A small scale service provider has the option of availing service tax exemption in case the aggregate turnover value of taxable service does not exceed Rs 10 lacs in a financial year

It should be kept in mind that even though service tax is required to be paid only after the aggregate value of services provided exceeds Rs 10 lacs in a financial year , the service tax registration needs to be applied within 30 days of the turnover exceeding Rs 9 lacs

For the service tax collected by you and which you have not paid to the government , penalty and prosecution can be initiated against you be the department under section 89.

89(1)(a) - knowingly evades the payment of service tax under this Chapter

89(1)(d) - collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due

Penalty vary from 1 year to 7 years imprisonment depending upon whether it is 1st offence or subsequent offence and quantum of service tax pending to be paid and period more than 6 months or not.

Regards

Ronak Kothari

ASRK & Associates