In case of foods served in a/c restautrant, if the turnover is say 15 lacs. As per service tax determination of value rule 40% is the amount of services charged. Considering it the value of taxable services comes to 6 lacs. Whether any service tax payble on it. Or the assess can avail the basic limit of rs. 10 lacs. This is the first year and first turnover of the company so basic limit of rs. 10 lacs is applicable.
Hi Gaurav,
Let us not complicate the service tax law.
Please note the threshold exemption limit is available from the very first ruppe and till it reaches to Rs. 10 lakh and hence out of Rs. 15 lakh, Rs. 10 lakh is exempt [Notification No. 33/2012] and hence on Rs. 5 lakh you can receive benefit of valuation rules i.e. charging ST on 40% of value.
In other words, more simply, service tax law starts to a small service provider from Rs. 10,00,001/- and hence only after this the question of valuation methods arise. How can we apply valuation methods to first Rs. 10,00,000/- when it is not taxable at all.
I hope your doubt is clear.
Best Wishes.
Nicely explained by Gautam.
Regards,
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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