Blog 6 : Small Service Provider Exemption :

Service tax provides for an exemption to small service providers who provide taxable services of a value not exceeding the specified limit. The specified limit is now Rs. 10 lakhs. In other words where the value of taxable services provided do not exceed Rs. 10 lakhs in the previous financial year, the concerned service provider would not be required to pay service tax up to receipts of Rs. 10 lakhs in the current financial year. The exemption is through notification 33/2012ST as amended from time to time. The service provider should however satisfy certain conditions which are as follows –

·         Taxable services provided by a person under a brand name or a trade name (whether registered or not) of another person would NOT be eligible for this exemption

·         A receiver of services who is liable to pay service tax on the services he has received. Eg. Import of Service & recipient of Goods Transport Agency service.

·         Once an option is exercised in regard to this exemption during a financial year, it cannot be changed in the same financial year. [This however does not mean that the claiming of the exemption makes it compulsory to claim for the whole year. In between even without reaching Rs.10 lakhs the option to pay can be made.]

·         No cenvat credit can be availed on inputs or input services used in providing such output service for which exemption is being claimed.

·         Cenvat credit cannot be availed on capital goods received in the premises of provider of such service during the exemption period.

·         On the date of availment of exemption option, the service provider who has taken cenvat credit, shall pay an amount equivalent to the cenvat credit taken by him in respect of inputs lying in stock or in process on the date of availment of exemption. After paying such an amount, if there is any balance of cenvat credit remaining unutilized, such balance would lapse.

·         The exemption shall apply in respect of the aggregate value of ALL taxable services provided by the service provider (even if from more than one premises) and not individually.

·         Exempted services shall be outside the purview of the exemption of this notification. In other words, the value for ascertaining the limit of Rs. 10 Lakhs would be that of taxable services alone on which service tax is payable.

·         The aggregate value of such services provided in the preceding financial year should not exceed the aforesaid exemption limit.