In service tax, there is exemption for small service providers, where one need not pay service tax if the aggregate turnover of taxable services does not cross INR l0 Lakhs.
But there are situations where businesses voluntarily take service tax registration for various purposes.
Therefore question arises whether service tax has to be charged by the business, the moment registration is taken.
To clarify this question, one has to look at the exemption notification
Below is the extract of the notification
the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said Finance Act:
The exemption contained in this notification shall apply subject to the following
Conditions, namely:-
(I) the provider of taxable service has the option not to avail the exemption contained in this notification and pay service tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year;
On analysis of above, it is quite clear that service provider has the option not to avail exemption, can go ahead and register with service tax. The provision is quite clear. However, once service provider starts to charge service tax, then he has to charge for the entire financial year.
Therefore it is not compulsory to charge service tax if the turnover does not does cross 10 Lakhs.
One other question asked in this regard is
Whether it is compulsory to charge service tax in every year ?
You need to only charge service tax in the financial year when the turnover crosses INR 10 Lakhs. However once you have charged service tax, you should charge for the entire financial year.
However in subsequent financial year, you can opt-out and need not charge service tax.