What is the limit of turnover for charging service tax?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 snehal sule asked almost 3 years ago

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7 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pankaj answered over 1 year ago

Although Service Tax is required to be paid only when the aggregate value of services provided exceeds Rs. 10 Lakhs in a financial year, the service tax provider is required to apply for Registration for Service Tax within 30 days of his turnover exceeding Rs. 9 Lakhs

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Anil Dhawan answered almost 3 years ago

If you are an entrepreneur, this anomaly in the service tax rules should worry you. While the threshold amount billed to customers has been put at Rs 10 lakh in a year. But once you have registered for crossing the Rs 10-lakh amount, you will be paying tax, even if the billing amount is lower in the future. From June 1, service tax will be increased to 14 per cent from 12.36 per cent. Anybody who provides a service is liable to pay service tax. These could be professionals such as lawyers, doctors, chartered accountants or owners of beauty parlours, coaching classes, fitness centres, etc. But unlike income tax, service tax is not charged automatically and there are some exemptions. The service provider has the option of not registering for service tax as long as the amount billed to customers does not cross Rs 9 lakh in a year. But there are some advantages of registering, even if your billed amount is less than Rs 9 lakh. For instance, government departments or offices looking for any kind of service, typically insist on registered service providers, says Sanjeev Gokhale, a Mumbai-based Chartered Accountant. So, if you own a company that provides housekeeping services and are vying for a government project, it is better to register yourself with service tax authorities to avoid getting rejected. Even after registering, you don't have to pay service tax till the billed amount crosses Rs 10 lakh in a year. But once it does, then you have to pay service tax. The threshold value for service tax is calculated taking into account the previous year's turnover as well as the current year's turnover. So, assuming the aggregate value of your or your firm's services is Rs 11 lakh for 2014-15, you have to pay service since the threshold value of Rs 10 lakh has been exceeded. If the value of services for 2015-16 crosses Rs eight lakh, you still have to pay service tax, since the aggregate value of service is calculated on the previous year. Then if in 2016-17, the aggregate value of service comes to Rs seven lakh, then you have the option of not paying service tax, because in the previous year (2015-16), the threshold was less than Rs 10 lakh (Rs 8 lakh in this case). But if in 2016-17, the aggregate value of service exceeds Rs 10 lakh, then you will have to pay service tax.

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Ganeshbabu commented over 1 year ago

Nice coincidence with above answer, looks like both copied from same source

Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

If you are an entrepreneur, this anomaly in the service tax rules should worry you. While the threshold amount billed to customers has been put at Rs 10 lakh in a year. But once you have registered for crossing the Rs 10-lakh amount, you will be paying tax, even if the billing amount is lower in the future. From June 1, service tax will be increased to 14 per cent from 12.36 per cent. Anybody who provides a service is liable to pay service tax. These could be professionals such as lawyers, doctors, chartered accountants or owners of beauty parlours, coaching classes, fitness centres, etc. But unlike income tax, service tax is not charged automatically and there are some exemptions. The service provider has the option of not registering for service tax as long as the amount billed to customers does not cross Rs 9 lakh in a year. But there are some advantages of registering, even if your billed amount is less than Rs 9 lakh. For instance, government departments or offices looking for any kind of service, typically insist on registered service providers, says Sanjeev Gokhale, a Mumbai-based Chartered Accountant. So, if you own a company that provides housekeeping services and are vying for a government project, it is better to register yourself with service tax authorities to avoid getting rejected. Even after registering, you don't have to pay service tax till the billed amount crosses Rs 10 lakh in a year. But once it does, then you have to pay service tax. The threshold value for service tax is calculated taking into account the previous year's turnover as well as the current year's turnover. So, assuming the aggregate value of your or your firm's services is Rs 11 lakh for 2014-15, you have to pay service since the threshold value of Rs 10 lakh has been exceeded. If the value of services for 2015-16 crosses Rs eight lakh, you still have to pay service tax, since the aggregate value of service is calculated on the previous year. Then if in 2016-17, the aggregate value of service comes to Rs seven lakh, then you have the option of not paying service tax, because in the previous year (2015-16), the threshold was less than Rs 10 lakh (Rs 8 lakh in this case). But if in 2016-17, the aggregate value of service exceeds Rs 10 lakh, then you will have to pay service tax. This exemption of not paying service tax is given to small-scale entrepreneurs so that they are not forced to increase charges to their customers. But if you charge your customers service tax, then you are liable to pay the same to the government, even if your turnover does not increase Rs 10 lakh, says Bipin Sapra, tax partner, EY. "One-way businesses try to reduce their tax burden is by splitting their companies or firms and keeping the turnover below Rs 10 lakh,'' says Sapra. Another condition to keep in mind is that if you are the franchise of a chain, then you are liable to pay service tax from day one, irrespective of the turnover. Taking the same example of a beauty parlour, if it is a standalone one, service tax is applicable only if the aggregate value of service crosses Rs 10 lakh. But if it is a franchise of a chain, say, L'Oreal, then service tax is applicable from day one. "The rationale behind this is that as franchise of a big chain, you already have an advantage of a big brand. Whereas the exemption is given only to encourage small-scale entrepreneurs,'' says Sapra. To reduce the tax burden, many salon owners carve out separate premises for the bigger brand and register it as a separate entity. Today, service tax is paid online. For a company, the payment has to be done monthly and for propriety or partnership firms, it has to be made on a quarterly basis. The returns have to be filed on a half-yearly basis.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Chirag answered almost 3 years ago

Service tax dept is required to be informed as and when you cross a limit of Rs.9 lacs in the financial year as an advance intimation. Refer web site for details and you have your answer. After crossing 9 lacs if you anticipate that you are likely to cross 10 lacs in that year than you have to apply for registration and it is compulsory and not optional. Register when turnover exceeds 9 lacs, charge when turnover exceeds 10 lacs. Requesting for registration after crossing 10 lacs may invite penalties.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 sanjay answered almost 3 years ago

Preceding F Y Less than 10 lakh Current F Y Less than 10 lakh No service tax Preceding F Y Less than 10 lakh Current F Y More than 10 lakh Service tax applicable after 10 lakh Preceding F Y More than 10 lakh Current F Y Less than 10 lakh service tax applicable from Rs one No exemption available

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Divya Sharda answered almost 3 years ago

If in previous year aggregate value of taxable service provided by you was less then 10 lakh And in present financial year the aggregate valueof taxable service provide by you is also less then 10 lakh then no service tax need to pay However if taxable service provide by you is more then 10 lakh then you start pay the service tax after crossing threshold limit.

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Open uri20170510 32134 g51r02?1494421831 Ganeshbabu answered almost 3 years ago

Rs.10 lakhs is the limit of turnover for charging servicetax.Once your turnover exceeds Rs.10lakhs you need to charge service tax in your invoice and collect from customers and remit to government. Rs. 10 lakhs is threshold exemption limit,,service tax applicable to you continously once you crossed this 10 lakhs limit in any financial year, Terms and Conditions for availment of threshold exemption as per Notification No. 33/2012 Service Tax- dated 20.06.2012

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