Import of service

[nitin deshmukh]

Dear Sir,

I am receiving import of service and i have paid invoice value to service  provider and tax treatment is

1. I have paid With holding tax as per schedule rates (income tax) that is my expenses. i have not issue any certificate to service  provider .

2. I have paid a service tax in Reverse charge i have paid service tax only Invoice value. at the time of calculation i have not consider with holding tax amount

my practice is correct or not should i consider grossing up amount with holding tax (Income tax)

give your best opinion

Best regards

Nitin Deshmukh

[Rajesh Nathoo]

Dear Mr. Nitin ,

I think u are speaking of TDS paid by u on the income earned by your foreign service provider . If this is case you have to include this amount in gross value for discharging ur ST liability . Basic logic being that if Service Provider would have discharged his ST liability directly , he would have included this amount in gross value . So service receipient is liable to follow follow the same rule .

[sreemannarayana B]

As per Section 67, the value of any service shall be the gross amount charged by the service provider  for such service render by him. Therefore, Service tax is payable on gross amount including TDS. 

AI Summary

Gross value inclusion: withholding tax paid on imported services must be added when computing reverse charge service tax liability. Import of services taxed under reverse charge must be computed on the gross amount charged by the provider; amounts withheld as tax (TDS) paid by the recipient form part of that gross consideration and must be included when determining the service tax liability.