Threshold limit for service tax

for 1st year 12-10= 2 lacs taxable 

for 2nd year 15 -0 = 15 lacs taxable

Yes.  First  year 2 lacs, and for the next year the exemption is not available.  You have to collect and pay the tax for 15 lacs turnover.

and if the company earns income of Rs. 5 lakhs in the third year what will happen than?

The said 10 lac exemption we can claim at once when turnover exceed 10lac they are not small service provider and from next year onwards they need to charge even their turnover is 1rs. so third year if 5lac then taxable amt is 5 lac

Sir one question there is reverse charges mechanism system

for example supply of man power 25%  and 75% ie 3.09% and 9.27% where 3.09% is shown as service tax receivable but what about 9.27% how it can be shown as accounting entry?

@ Pawan

1st year 12-10 = 2 lacs on this service tax to be paid

2nd year service tax to be paid on full tot i.e. 15 lacs

Dear Mr. PAwan,

First Year Rs. 2 lacs is taxable. Next year onwards full amount is chargeable to Service tax evein if it is only ₹ 1.

Show 75% service tax as your payable amount and your receivable amount as well It is your liability to pay 75% in cash to government & you simultaneously you can take the credit of the said amount. So this 75% is Payable as well as receivable for you.