When to start charging service tax ?

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Nupur Sharma

225 Points Posted on 24 June 2015

Hi All,

A client of mine is working as a freelancer and he has registered himself for service tax voluntarily. He was covered under export of services exemption earlier and hence was not liable to deposit any service tax, still he got himself voluntarily registered and filed NIL returns.

Now, he has started providing services to Indian clients as well from this year. My question is that should he start charging service tax from his clients right from the first invoice issued to an indian client for domestic services or should he wait till he crosses Rs. 10 Lacs taxable services (i.e. domestic services ) value and then start charging service tax ?

I am confused because I have read it a couple of times that if a person is voluntarily registered for service tax then he must start chargin and depositing service tax right from the first invoice.

Please help ... I could not find a solution to this query anywhere.

thanks

Replies (3)

Nikhil Kaushik

Fellow CA

70840 Points Posted on 24 June 2015

not at all. even if you have registered voluntarily, you can claim exemption available upto 10 lakhs turnover.

Nupur Sharma

225 Points Posted on 24 June 2015

So that means he should start charging service tax in his invoices once he crosses Rs. 10 Lacs turnover. e.g. If his turnover this year comes to Rs. 11 Lacs, then he should have collected service tax from his clients on Rs. 1 Lac only ? He has no idea if his turnover will cross Rs. 10 Lacs or not. Nothing can be estimated in his case.