When to Register?

Application for registration of Service Tax should be made in Form No ST-1 within 30 days from the date on which a service becomes taxable, or from the date of commencement of business for providing taxable service. ( Section 69)

However exemption from registration and payment of service tax is available to small service providers based upon a threshold limit of the value of the service provided by them.

1. The turnover limit, i.e., the aggregate value of taxable service for threshold based exemption is, currently, Rs. 10 lakh in a year- wef from 01.04.2008. (Not. No 8/2008, ST dt 01.03.2008). However, a person availing of this exemption is required (under section 69 of the Act, read with notification no.10/2009 dated 01-03-08-ST) to register with the department on achieving a turnover of Rs 9 lakh in a financial year in respect of all taxable services provided by him. The expression “aggregate value not exceeding the threshold value of Rs 10 lakh” has been defined in notification No. 10/2008 dated 01-03-08-ST.

2. Earlier this exemption limit, of the aggregate value of clearance, from payment of service tax was Rs 8 lakhs and the limit after which registration was to taken was Rs 7 lakhs- with effect from 01.04.2007 (vide Not. No. 4/2007 dt 01.03.2007).

3. Prior to this the exemption limit, of the aggregate value of clearance, from payment of service tax was Rs 4 lakhs and the limit after which registration was to taken was Rs 3 lakhs with effect from 01.04.2005( vide Not. No. 6/2005 dt 01.03.2005). Prior to this there was no exemption and tax was payable from first point.

4. If a service provider wishes to register and pay service tax before the exemption limit as in threshold based exemption he may do so. But this option once exercised cannot be opted out off during the financial year.

5. An ‘input service distributor' is an office or establishment of a manufacturer of excisable goods or provider of taxable service. It receives tax paid invoices/bills of input services procured (on which CENVAT credits can be taken) and distributes such credits to its units providing taxable services or manufacturing excisable goods. The distribution of credit is subject to the conditions that,- (a) the credit distributed against an eligible document shall not exceed the amount of service tax paid thereon, and (b) credit of service tax attributable to services used in a unit either exclusively manufacturing exempted goods or exclusively providing exempted services shall not be distributed. An input service distributor is required (under section 69 of the Act, read with notification no.26/2005-ST) to take a separate registration before he commences business.

 

6. Certificate of Registration in form ST-2 shall be granted within 7 days of making the application for registration; otherwise, it will be deemed to have been granted. (Section 69, Finance Act 1994; Rule 4, Service Tax Rules, 1994)