Understanding Service Tax Payments: How Does My Friend's HR Consultancy Handle It?

One of my friends is running an HR consultancy. It has a service tax number. How would he pay the service tax amount to the government? What is the slab amount to pay service tax? What is the frequency to pay the service tax amount?

Thank you.

Dear Jignesh,

Any provider of taxable service whose 'aggregate value of taxable service' ('aggregate value' has been defined in Rule 2(b) of The Service Tax (Registration of Special Category of Persons) Rules, 2005) in a financial year exceeds nine lakh rupees. After crossing the limit of 10 lakh, he has to pay service tax on every receipt. This limit is for a financial year. Once he crosses the limit in any financial year, then he has to pay service tax for the next financial year from rupee 1. From the next year, he can't claim the benefit of exemption of Rs. 10 Lakh. This exemption is for the financial year in which he crosses the exemption limit. If his receipt doesn't cross Rs. 10 lakh for 3 years, then he doesn't have to pay service tax for 3 years.

Periodicity of Payment

- For personal, HUF, proprietary, or partnership firm - Quarterly
- For others - Monthly

Best of luck. Feel free to ask anything else.

Regards

New Service Tax Rules for FY 2012

New service tax rules have been introduced in FY 2012 (effective from 01.04.2012), which entail a 12% service tax and a 3% Education Cess, with HR Sr. service at 12.36%. Please refer to Notification 40/2012.

Regards