• Service Tax payment for 2014-15

I worked as contracter from Feb 8, 2013 to July 2, 2014 in the field of medical writing for a US based MNC (an Agency), but got paid through their Inidan parter in INR. Initially, I was not aware of any service tax rules. So I never charged the service tax amount to my client and it was not laid down in my contract. Later, I got to know that if the total annual revenue earned exceeds 10 lakhs, we need to pay service tax. I registered for ST at the end of March 2014 and paid the 2013-2014 service tax for the amount exceeding 10 lakhs on April 25, 2014  (including a late fee of INR 500). 

My contract was already renewed by the client in 2014 February, for the following year. From April 2014, I tried to explain and negotiate with my client and get an ammendment to the contract agreement, so that I can include service tax amount when I present the invoice further. Due to thier internal procedures, it took a long time for them to send the amendment, which came at the end of June 2014, saying that I will be able to include the service tax starting August 2014. However, since the business was not soo good, I was already looking out for full time employment and decided to switch to a full time job with another MNC in Hyderabad, instead of working as a contracter, in July 2014.

For the period of April - June 2014, my total income as contracter was ~5.5 lakhs INR and I never charged service tax to the client for the services I offered. I was told by my friends that if the income does not exceed 10 lakhs, I am exempt from paying service tax. So I did not file the ST in Dec last year or in March-April 2015. However, recently I consulted a CA regarding filing IT returns for 2014-2015 and bought upt this case for discussion. I was told that have to file ST and pay fine, I will have to pay close to INR 71,000 (including fine) even if my income as contractor was not more than 10 lakhs (which is huge amount for me in my current situation). The CA is saying that since I already availed the exemption of 10 lakhs one time, I will not be able to avail the exemption again this year.

I am ok to pay the fine for not filing taxes and close this ST account. Somehow, all the research I am did by internet surfing says, "In a given financial year, if the income is below 10 lakhs, a person is allowed to avail the exemption (of below 10 lakhs)".

I request you all to kindly let me know if I can avail the exemption or not and if yes how much I will need to pay towards service tax. Any advice and help is greatly appreciated.
Asked 3 years ago in Service Tax from Hyderabad, Telangana
Since your gross receipts from contractor service for financial year 2013-14 are more than Rs 10 lakhs, you cannot avail exemption provided for small service provider again in following year 2014-15. So better pay service tax on Rs 5.5 lakhs and close the matter and surrender the registration if you are not intent on continuing the work.
Vijay N. Kale
CA, Hyderabad
248 Answers
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