When to start charging service tax from clients ?

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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 (10)

Sonakshi Mangla

Employee

238 Points Posted on 24 June 2015

He is eligible to claim exepmtion limit of Rs. 10 Lacs . Charge S.T once your client crosses the basic exemption limit,

CA Siva Palla

FP&A- Associate Manager

62 Points Posted on 24 June 2015

Service Tax needn't be charged from the beginning. You can avail the small service exemption and need to collect tax only after crossing the threshold of 10 lacs.

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.

NITIN SHARMA

DIRECTOR

750 Points Posted on 24 June 2015

Voluntary registration does not attract the tax libility. And he is elegible for the threahold deduction of rs. 10 lakhs. When ever he provides services of rs.10 lakhs he should start to collect any payment of service tax.

VIVEK MALAVE

Chartered Accountant

284 Points Posted on 24 June 2015

Charge service tax after crossing rs 10 lacs for current year... and once you cross 10.lacs in ths year... then from next year u wl required to collect service tax from rs 1

karan jit singh

Consultant

1148 Points Posted on 24 June 2015

Dear Threshhold limit is seen only for registeration purpose. As u have regisered voluntarily , you can invoice upto 10 lakh tax free after that all servixes to be invoiced @ 14% ST

Kuldipsinh Jadeja

Job

320 Points Posted on 25 June 2015

Hello Nupur,

As per Notification No.33/2012-ST, Small service provider(SSP) means a service provider, the aggregate value of taxable services rendered by whom, from one or more premises, does not exceed Rs.10 lakhs in the preceding financial year

Quantum of Exemption to SSP

SSP is entitled 100% exemption from service tax on aggregate value of taxable services upto Rs.10 lakhs provided during the financial year.

Hence, till the assessee remains SSP, he can claim exemption from service tax on aggregate value of taxable services upto Rs.10 lakhs by aviling the benefit of exemption notification. So whether you are voluntarily registered or mandatorily registered you can avail the benefit of the above prescribed notification provided the conditions spcified therein are being satisfied.

Sailkrishna

Cpt qualified

22 Points Posted on 25 June 2015

When you started raising bills/invoices.

Siddharth

article

72 Points Posted on 26 June 2015

Dont charge st till u cross limit of 10 lacs once u cross then only levt st on value of services above 10 lacs..but before crossing st limit of 10 lacs u have charged st to any of ur client then u definitely required to pay it to government. If u didn't cross 10 lacs this yrs also then 10lac limit available to next yr also..

CA ASHOK DAHIYA

122 Points Posted on 26 June 2015

No need to pay service tax on service rendered for a value upto Rs.10 lacs in case of new provider. 10 lakhs will be considered from first consecutive invoices. He'll be covered under SSP exemption. even voluntarily registered provider covered under this exemption. Pay service tax only after crossing 10 lakh service value.... :)