Definition and Scope of Exemption

• Small service providers were granted exemption from service tax under a specific scheme.
  
• The exemption was notified through Notification No. 33/2012-ST, and earlier notifications.
  
• It applied to those whose aggregate value of taxable services did not exceed ₹10 lakhs in a financial year.
  
• This exemption was known as the Small Service Provider (SSP) exemption.
  
• The objective was to ease the compliance burden on micro and small businesses.
  

Eligibility Criteria for the Exemption

• The service provider’s total taxable services in the preceding financial year must not exceed ₹10 lakhs.
  
• Services provided must not fall under reverse charge mechanism, where the recipient was liable.
  
• The provider should not use a brand name or trademark belonging to another entity.
  
• No CENVAT credit could be claimed on inputs or input services during the exemption period.
  
• Once the threshold was crossed, tax was payable only on the excess amount over ₹10 lakhs.
  

Registration and Voluntary Compliance

• Registration was not mandatory if taxable turnover remained below ₹9 lakhs.
  
• Providers could voluntarily register and opt out of the exemption if preferred.
  
• Upon registration, filing of ST-3 returns became mandatory even if tax was not payable.
  
• Transitioning from exempt to taxable status required tracking of receipts carefully.
  
• Once opted out, the exemption could not be re-availed mid-year.
  

Inapplicability and Limitations

• The exemption did not apply if the provider charged and collected service tax.
  
• Providers supplying services on behalf of others using a foreign or franchised brand were excluded.
  
• Exemption was not available for services categorized under reverse charge.
  
• Entities using the exemption were not allowed to issue tax invoices showing service tax.
  
• Service recipients could not claim input credit on such exempt services.
  

Continuation Until GST Implementation

• The exemption remained effective until June 30, 2017, under the service tax regime.
  
• With the implementation of GST on July 1, 2017, the SSP exemption ceased to apply.
  
• GST introduced new threshold limits, replacing the earlier service tax-based exemption.
  
• Historical SSP exemption claims remained relevant for audits and assessments.
  
• The exemption supported many professionals, freelancers, and small-scale service businesses.