Service Tax Exemption Limit : 2017

In India most of the entrepreneurs which are registered under any legal entity so they are always confuse that service tax is applicable on them or not. So today we talk about Service Tax Exemption Limit in the year 2017. so everyone businessman clearly facts about the Service tax exemption limit.

Service Tax Exemption Limit

So Before Going for the Service Tax Exemption Limit Let’s under about the Service Tax in India

What is service tax?

Service tax is a tax levied by Central Government of India on services provided or to be provided excluding services covered under negative list and considering the Place of Provision of Services Rules, 2012 and collected as per Point of Taxation Rules, 2011 from the person liable to pay service tax. It is a type of indirect duty levied on particular services that are categorized as taxable services. The responsibility of paying this kind of levy lies on the service provider. This duty can’t be levied on services that are not included in the specified list. Over last one or two years, the domain of service tax been broadened to include new services.
The goal behind imposing service tax in India is to lower the extent of concentration of taxation on business and industry without compelling the government to find the middle ground on the revenue requirements.

Person liable to pay service tax is governed by Service Tax Rules, 1994 he may be service provider or service receiver or any other person made so liable. It is an indirect tax wherein the service provider collects the tax on services from service receiver and pays the same to government of India. Few services are presently exempt in public interest via Mega Exemption Notification 25/2012-ST as amended up to date & few services are charged service tax at abated rate as per Notification No. 26/2012-ST as amended up to date. Along with the provisions of service tax Government has also given liberty in imposition of this tax. To understand this service tax exemption let us  understand certain criteria where is exemption is provided.

Service Tax Rate in the year 2016 ?

Presently from 1 June 2016, service tax rate has been increased to consolidated rate @15% of value of services provided or to be provided with the krishi kalyan cess. Before the 1st June 2016 Only Service Tax@14% with the Swachh bharat cess is applicable but now its include also krishi kalyan cess from the Budget 2016. So now service providers have to pay 15% Service Tax.

Service Tax Exemption Limit in the Year 2017

In the year 2016 as per the Economics Times Government is thinking about the increase the Service Tax exemption limit from 10 Lac to 25 lac per annum but till the date Service tax provider can avail only exemption for the small service providers exemption in India. So Right Now as per notification number 33/2012 ST dated 20/6/2012(Small Service Provider Exemption Notification) is avaialble in the year 2017 which is 10 lac Rupees per Annum for paying service tax but 9 lac Rupees turnover for the Service Tax Registration.

Exemption Notification about the Service Tax

Applicable from Rate of service tax Notification
1/4/2005 4 lakhs 6/2005 dated 1/3/2005
1/4/2007 8 lakhs 4/2007 dated 1/3/2007
1/4/2008 10 lakhs 8/2008 dated 1/3/2008
1/7/2012 10 lakhs 33/2012 dated 20/6/2012

So Limit is work in following manner for the year 2017

Aggregate value of taxable services provided for previous year Aggregate value of taxable services provided for current year Service tax applicable
Less than 10 lakhs or 10 lakhs Less than 10 lakhs or 10 lakhs Nil
Less than 10 lakhs or 10 lakhs More than 10 lakhs service tax is applicable after Rs. 10 lakh turnover
More than 10 lakhs Less than 10 lakhs Service tax is applicable from single rupee. No exemption.
More than 10 lakhs more than 10 lakhs Service tax is applicable on all the service. No exemption.

Negative List of Service Tax

Budget 2012 revamped the taxation provisions for services by introducing a new system of taxation of services in India. In the new system all services, except those specified in the negative list, are subject to taxation. Earlier the levy of service tax was based on positive list – specified 119 taxable services.
As per clause (34) of section 65B of the Finance Act, 1994, the term “Negative List” means the services which are listed in section 66D.

SERVICE TAX EXEMPTION

Normally, service tax is paid on all services except for those included in the negative list of services. All service providers including central and state government service providers as well as private sector service providers are liable to pay service tax. However, there are a few exceptional scenarios wherein service providers can avoid paying service tax. The Government of India can offer part or complete exemption by circulating an exemption notice. However, it cannot be offered with retrospective effect. Some of the exemptions are as follows:

• Services offered to United Nations and Global Agencies and provisions to Special Economic Zones (SEZ) are excepted from payment of service tax.
• It is not imposed on export of services. So Export of the Services Exempt from Service Tax in India.
• Service tax is not payable on cost of commodities and substances rendered at the time of offering services. This kind of exemption is allowable only if CENVAT credit on those commodities and substances is not collected.
• A small scale or individual service provider can enjoy service tax exemption, if its total turnover of taxable services does not go beyond Rs. 10 lakhs in a single a financial year.
• The recipients are exempted from paying service tax for the goods and services received from the service provider, if there is written proof indicating the value of the goods and materials and no credit of duty is paid on such goods and materials, and if the services have been rendered under the CENVAT Credit rules.
• Service tax is not applicable to the services provided to diplomatic missions and to the officers a diplomatic mission and their family members.
• Services such as port services, goods transport services and containerised transport services received by an exporter and used for export of goods are not taxable. In such cases, service tax paid by an exporter on the above mentioned situations is refunded to the exporter.

So this is Quick Guide regarding the Service Tax Exemption Limit in the year 2017.