No Service Tax Upto 10 Lakhs Value of Services Rendered- Small Service Providers Scheme

small service providers exemptionThe following scheme is termed as “SMALL SERVICE PROVIDER SCHEME” is an OPTIONAL one, It is recommended for a service provider to make judicious assessment after going through full pros or corn of opting this scheme which are explained below in detail:

Applicability:

This scheme is open to all the type of service providers whether Individual service provider, Firms, Companies, HUFs, AOPs or BOIs, if they fall under any one of the following 2 scenarios:

  1. If you are a new service provider commencing your services during the current financial year 2016-2017.
  2. If you are an existing service provider and your Aggregate Taxable Services Rendered amounted to Rs. 10,oo,ooo or less during the preceding financial year.
    i.e. in the preceding Financial Year 2015-16, if your total taxable services amounted to say 8,00,000 which is less than 10,00,001/- hence you need not pay service tax in the current Financial Year 2016-17 upto 10,00,000 Taxable Service provided during the current financial year.

Non-Applicability:

  1. Branded Services: In case you are providing services using Brand of any other person, then you are not eligible for this scheme
  2. Reverse Charge Cases: In case you are required to pay service tax under Reverse Charge Mechanism as service recipient, to such extent of services received. For Service provided under normal mechanism, you are eligible for this scheme

No Service Tax upto 10,00,000:

Service provider need not charge service tax from its customers upto Rs. 10,00,000 of taxable services rendered. Beyond Rs. 10,00,000, the service provider has to charge service tax on bills raised and should pay such service tax collected from its customers. Thereby he is not eligible for Small Service Provider scheme for the next financial year as well.

 

Restrictions:

No Input CENVAT Credit:

1. Service providers opting for this scheme are barred from using input CENVAT (Service Tax and Excise Duty) paid on Service Received by such service provider which are used in providing services by it to its customers.
2. Such restriction is upto 10,00,000 hence any inputs cenvat credit paid on services received after limit exceeds 10,00,000 can be utilized for paying Service Tax.

No CENVAT Credit on Capital Goods:

1. No CENVAT CREDIT available until the total services rendered doesn’t exceed Rs. 10,00,000
2. Unlike CENVAT Credit on Inputs, in the case of CENVAT paid on Capital Goods before the limit exceeds 10,00,000, can be utilized in full  ones the taxable services exceed Rs. 10,00,000

Dilip Kumar

+Dilip Kumar (Author and Editor of The Tax Info) is a CA Student from Hyderabad, Loves Blogging on Tax related matter.

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