Small Service Provider exemption, Service Tax

[Joice Jacob]

Dear Expert,

I have a partnership company from October 2007, which provide 100% service under Consulting Engineer category (Small Service Provider). During FY 2007-08, we didn't have any business. During FY 2008-09, we had business for Rs.570000/-. And during the FY 2009-10 we have done 870000/-. Since we new that we may cross the exemption limit of Rs.10 L, during the FY 2010-11, we had taken the Service Tax registration and paid Collected and paid the Service tax for the service above 10 lakhs and did upto Rs.1470000/- (Service tax for Rs.470000/-). As we thought that our gross service would not exceed 10 lakhs, we have not collected any service tax (also not paid, other than the due of FY 2010-11) for the FY 2011-12 till date. But at this situation we are going to exceed 10 lakhs from the next month onwards (August 2011) due to an unexpected order to us (Thank God). 

Dear Expert, my question are that, 1) should I collect the service tax for the amount which I have already provided till date (Which is about 9 laks) ?

2) Or we need to collect and pay service tax only for the amount above 10 L ?

3) what would be my position in FY 2012-13, since I may cross 15 lakhs.

Your kind advice is requested.

Joice Jacob.

Posts / Replies

[Venkata Ramana Ratamsetty]

we are need sugistion from u.we are photo graphy studio.we are received this year design charges from customers what is examption amount for design services

 

rgds

ramana

[satish nair]

Dear Joice

Glad to note that yours is a growing concern...  :-)

As for taking the basic exemption - the same is based on the previous year's turn over.

So since during fy 10-11 you have crossed Rs.10 lakhs and paid service tax on 4.70 lakhs.

The position during fy 11-12 is that you wil have to start collecting service tax from the first rupee charged to your customer. what i mean is that you will have to start collecting tax from 01.04.11

I hope i have clarified your queries.

rgds

ca. satish nair

[Joice Jacob]

Mr.Sathish Nair,

Thank you very mush for your clarification and advice.

Now I am very much clear.

 

Regards,

 

Joice Jacob.

 

[Joice Jacob]

Thank you very much to all for the clarifications & prompt reply.

[K V V B gangadhar]

Dear Satish,

I just need clarification, in case if the turnover closes less than 10 Lakhs by 31Mar 2012 due to business up and downs, what about tax collected from 1st Rupee collected from 1st customer ?

[malhar shenoy]

In case if the turnover closes less than 10 Lakhs by 31Mar 2012 due to business up and downs, tax collected from 1st Rupee collected from 1st customer  is payable for two reasons,

1.Since in the previous year the taxable value of service has exceeded Rs 10 lakhs there is a obligation to collect the service Tax.

2. Also Service Tax collected cannot be retained by the assessee, it has to be remited to avoid the penal actions.

However if the Service tax is wrongly collected then it has to be returned to , from it has been collected. If there is refund due then department shall not give refund to assessee but shall transfer to consumer Protection fund.

 

[YASH SOOD]

Joice...the  thumb rule is that u have to see the previous year to the next FY for the taxability.If turnover in the previous year exceeds the exemption limit,no exemption is allowable in the next FY. Summary of transactions in ur case r as under:- 

Turnover in 2008-09.....Rs. 5,70,000 

Turnover in 2009-10.....Rs   8,70.000

Turnover in 2010-11.....Rs   14,70,000

Turnover in 2011-12....   Exceeded Rs. 10 lakhs itself in Aug 2011

As such for the FY 2011-12 you were required to pay ST from the very first day i.e. from 1 April 2011and onwards, irrespective of the fact that u have  or have not collected any tax from the customers. Besides interest at prescribed rates is also leviable.If Deptt  show causes you, penal provisions  will also be invoked. Its better to deposit tax along with intt before the deptt initiates the proceedings.

[Venkata Ramana Ratamsetty]

HAI

HENCE WE ARE 2010-2011 U PAY ST ON 470000 ONLY

2011-2012 WHEN TOURNOVER REACHS 10 LAKHS IN AUG"2011 U MUST PAY IN ST

[malhar shenoy]

In my opinion , Service Tax for year 2010-11 is on Rs 4,70,000 only , but for the year 2011-12 liability is from the day one i.e monthly or quaterly as per nature of service provider.

And not from the month in which the value of  taxable service exceeds the thresould limit i.e Rs 10 Lakhs.

[YASH SOOD]

The contention of Sh. Venkata Ramana Ratamsetty is not acceptable. ST during 2011-12  was reqd. to be paid ab-initio from the very first day in April 2011 and no exemption of RS. 10 lakh is available