Service Tax in the 1st year of Registration

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  1. Ranjit

    Ranjit New Member

    I have a small consultancy contract whose value is 1L to be paid in april 15. I am also discussing a contract with a prospective customer for a contract of value more than 9L in current FY. My questions:
    • Do I need to pay service tax on the April consultancy payments of 1L? I have not added service tax in invoice.
    • Do I need to pay service tax on future consultancy payments from Day 1 as contract value is more than 9L in this FY?
     
  2. Parul_Gupta

    Parul_Gupta Active Member

    In the first year in which your turnover crosses Rs. 10 Lakhs - service tax would only be levied on the amount exceeding Rs. 10 Lakhs.

    Therefore, it wont be applicable on the Rs. 1 Lakhs already received by you.
     
  3. Ranjit

    Ranjit New Member

    Thank you. For the second contract, whose yearly value is more than 9L, do I need to pay service tax from begining?

    Regards,

     
  4. Parul_Gupta

    Parul_Gupta Active Member

    Yes, you'll have to pay from the beginning.
     
  5. Ranjit

    Ranjit New Member

    Thank you. I have consulting income of about 6L (in addition to salary income) on which 60K tax is already deducted. How much advance tax I need to pay before Sept 15? I am in the highest tax bracket in salary. So consulting also will be at highest slab.
     
    Last edited: Sep 4, 2015
  6. Karan Batra

    Karan Batra Well-Known Member

    @Ranjit : As you are already in the highest slab - tax ,@ 30% would be levied on 60,000 as well. Tax on such income would be 30% of 60,000 = 18,000

    You can either pay this tax as per the advance tax schedule or pay Rs. 18,000 in one go and be free from hassles of advance tax
     
  7. Ranjit

    Ranjit New Member

    Thank you Karan, Let me explain my question. My business income is 6L and is in highest tax slab. so tax will be 1.8L. Out of this 60K is deducted at source.
    How much Do I pay advance tax:
    30% of 1,8L - 60K = -6000 or no tax liability for Sept 15 cycle
    or
    30% of (1.8L-60K) = 36K

    Regards,
     
  8. Karan Batra

    Karan Batra Well-Known Member

    The first method of computation is correct.

    No Tax Liability for Sept 2015
     
  9. Ranjit

    Ranjit New Member

    I tried entering the data in last years income tax Java utility. In the tax computation, I get fine under section 234C. I am confused
     
  10. Karan Batra

    Karan Batra Well-Known Member

    Section 234C is applicable if the Advance Tax is not deposited as per the Schedule for deposit of advance tax
     
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