Service Tax on Construction of Commercial Building

Dear Naina,

Please refer the following notifications (Link below):

1. Notification No. 6/2005-Service Tax

2. Notification No. 4/2007 - Service Tax

3. Notification No. 8/2008 - Service Tax

        More over, the service provider availing the value based exemption under the above notifications, need to obtain Registration if the aggregate value of their taxable service in a financial year  has reached  Rs.Nine Lakh, as the threshhold exemption limit is upto Rs.10 lakh.

For more clarification (if any)

mail to: rabishc @ gmail.com

Rabish Chandra

A service provider is liable for service tax registration if his output service is withing the type of services which are chargeable to service tax and secondly value of total taxable services during the preceeding financial year exceeds INR 9 lakhs. Since in your case, value of services rendered in preceeding financial year is INR 3 lakhs (assuming gross receipts mentioned by you is by way of service rendrede which are within the service tax category chargeable to service tax as per service tax law), you are not liable for registration in FY 2011-2012. However since ur service taxable income exceeds INR 9 lakhs in FY 2011-2012, you are liable for registration in FY 2012-2013.

Your liability to pay service tax arises after value of service rendered crosses INR 10 lakhs in FY 2012-2013. Thus, you are not liable to collect the service tax for the first receipts for value of service rendered INR 10 lakhs. Amount received in FY 2012-2013 in excess of INR 10 lakhs would going to chargeable to service tax.

Thanks and Regards,

Manoj B. Gavali

I have read that registration is required within 30 days from the start of the business. So in F.Y. 2012-13, when the service provider will get himself registered, would he need tp pay the penalty/interest for delay in registration.

registration required at

a) completion of 9 lacs

b) within 30 days of 1st taxable sale (10 lacs)

depending on nature of business, it may happen that gap between 9 and 10 may get filled within days itself, so either of the above exceeds, the registration has to be applied. 

Take registration when you cross Rs.9 L and start paying tax when you cross Rs.10 L. For the year 12-13 no threshold exemptionis available.

Originally posted by : Naina
	An individual is engaged in construction of commercial buildings. During F.Y. 2010-11, his gross receipts were Rs. 3 lakhs. But in F.Y. 2011-12, his gross receipts are expected to be about Rs. 25 lakhs. Should he apply for service tax registration? If yes, then at what time? When he will be liable to pay service tax? Please resolve my query.

The assesse will need to get himself registered when the gross receipts crosses Rs. 9 lacs in 2011-12. Since the gross receipts in 2010-11 weer Rs. 3 lacs, he will get exemption on first Rs. 10 lacs received in 2011-12. Also abatement @ 67% will be available. So service tax to be chargeable by him will be :-

Gross Receipts  -  Rs. 25 lacs

Less : Exemption  -  Rs. 10 lac

Balance  -  Rs. 15 lacs

Less : Abatement @ 67%  -  Rs. 10.05 lacs

Balance  -  Rs. 4.95 lacs

Service tax on above @ 10.3%  -  Rs. 50,985.00