Threshold exemption under Notification No. 6/2005-ST

2. Threshold exemption under Notification No. 6/2005-ST :

The threshold limit for small service providers has been
increased from 8 lakh rupees to 10 lakh rupees for the Financial Year 2008-2009
onwards. Consequently, the aggregate value of taxable services provided by a
service provider during the Financial Year 2007-2008 up to a maximum of 10 lakh
rupees would be eligible for the increased limit for the financial year
2008-2009. To state in other words, if a person provided taxable services of
aggregate value of Rs.8 lakh in the F.Y. 2007-08, he does not pay any service
tax. However, if his taxable services exceed Rs.8 lakh, but do not exceed Rs.10
lakh, he is liable to pay service tax @ 12.36% on the value of services by which
the eight lakh limit is exceeded. For instance, if the aggregate value of
services provided during F.Y. 2007-2008 is Rs.9.50 lakh, service tax on Rs.1.50
lakh would be payable. However, since the aggregate value of taxable services
has not exceeded Rs.10 lakh, no service tax would be required to be paid until
the aggregate value of taxable services provided exceeds Rs.10 lakh in the F.Y.
2008-2009. Consequently, upon upward revision of the threshold exemption limit,
the turnover limit for obtaining registration is also increased from Rs.7 lakh
to Rs.9 lakh.