In the beginning of the F.Y. 2008-2009 xyz was expecting his Consultancy income to be Rs. 5,00,000 and till date actual Consultancy Income is Rs. 4,50,000 only and thus was exempted from Service tax as a small service provider. But during the end of this F.Y. he got a new assignment for Rs. 7,00,000. which made him liable to deposit Service Tax. Want to Know as he has not charged any Service Tax on RS. 4,80,000 earned Till date,
(i) Whether he have to pay Service tax on the same although he had not charged the same from his clients.
(ii) What would be the case if the income from new assignment is Rs. 5,00,000
(iii)Also want to know whether the exemption limit is for the amount Including Service Tax or without service Tax.
Dear Friend,
As I have earlier clarified that service tax exemption is based on some conditions and most important and basic condition is that
To avail service tax the current year, value of taxable service provided should not be more than exemption limit.
exemtion is not available on service provided on Brand name or trade name whether registered or not or of another person.
From your query it is assumed that last year service provided is also around Five Lakh and less than exmption limit.
so point wise answer to your queries are given below
No ,service tax upto exemption limit i.e 1000000 ,the aggregate of first bills collected ,is not required to be collected,so no need to deposit tax on 480000(amount collected earlier)
If income From new assignment is 700000 then total sale will be 480000+700000 =1180000,in that case firm should collect service tax on 11.80-10.00=1.80 Lakh only.and not on whole of the amount and more over in next year he has to deposit tax from the starting amount.And if assignment is of 500000 then total of first service receipt collected will be 9.80 Lakh i.e less than exemption limit of 10 lakh hence no tax is required to be deposited
Exemption limit is calculated on the basis on" Value of taxable service provided" and not including service tax .so amount of exemption is to be calaculated without service tax.
