Hello I received service tax letter with the following details: ======================================================================= Subject: Calling for records for scrutiny for FY 14-15,15-16,16-17,17-18 (Till June) Sir, With effect from 01.07.2012 all services listed in section 66D are under service tax. From relevant records available for financial year 2014-15 it appears that there is substantial mismatch between the details of gross receipt/ value as shown in ITR/TDS filed by you and service tax returns. You are thererefore requested to intimate the undersigned whether the service income entered by you during the above financial year is attributable to any negative-list servcie contained in section 66D, for any reason exempt from payment of service tax. You are also required to produce self certified copies of following ST-3 Return Income Tax Return (ITR-V) Form 26AS VAT/Sales Tax Return Balance Sheet Reconsilation Statement of returns (ST-3) Copy of agrement / contract ======================================================================= While I do have balance sheet and ITR-V filed for all years. My turnover for the years is as follows 2014-15: By Sales of Services 1803800 2015-16: By Sales of Services 1964886 2016-17: By Sales of Services 3028352 Income Tax Returns 2014-15: Total Income: 625785 2015-16: Income by profession: 757881 2016-17: Gross Total Income: 848766 I am a professional with team of developers and do software and website development. 90% of my income is from foreign clients. I have been advised in past that software as export is exempt from service tax. Can you please help me with a suitable reply which I can forward to the service tax department. Thanks in advance Raman
Hi,
- Yes, export of software was exempt from service tax subject to fulfillment of certain conditions.
- As you had obtained service tax registration therefore AO wants to verify the income shown in ITR with the ST-3.
- Please hire CA to assist you in this proceedings.
Thanks
Dear Sir,
Hope you are doing well !!
For draft response, please connect via email/call and send the relevant documents.
Thanks & Regards,
Payal Chhajed
Since the difference amount is sale of software which was exempt you can just mention that thing in your reply and submit the things asked for along with the invoice of the balance amount showing it as sale of software exempt from service tax.
It's just a normal query for reconciliation so just prepare the reconciliation and it will be fine.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Thanks Vivek. Thanks Payal. Naman, Thanks for your reply. I was happy to hear from you. For now I have sent a basic reply stating that we are exporter of software with required ITR. I am from Jaipur as well and would like to take it further with you, sent you an invitation! Raman
Yes sir I would be happy to assist you with your proceedings.
Thank you
Welcome Sir !
Hi
It seems your query is answered.
In case of further clarification required ,feel free to get in touch.
Dear Raman,
You don't need to worry. You can provide the requested documents and provide an explanation that 90% of your income was from export of services which were zero rated. Therefore , there is a difference in sales shown in ITR and in service tax returns.
Also provide reconciliation of two figures.
Just recheck that you have received the amount from your client in foreign currency and have FIRC for each payment.
