Servcie tax on Information technology software service

[Guest]

Dear Sir,

One of our Vendor providing AMC service of System Software.Under his invoice he is charging Service tax 14% on 90% of value and Vat on 10% of value.Therefore please explain whether he has charged correctly and if yes please give us any clarification, references regarding this ,Thanks & regards.

[DR.MARIAPPAN GOVINDARAJAN]

Sir,

Service tax @ 14% is leviable on the gross value of service rendered. VAT is meant only for goods. If you give the invoice in detail then it could be analyzed.

AI Summary

Service tax principle: levy applies to the full value of service; VAT is limited to goods, affecting invoicing. A vendor providing AMC for system software charged service tax on 90% of the invoice value and VAT on 10%. The advisor stated that service tax is leviable on the gross value of the service rendered and that VAT applies only to goods, adding that a detailed invoice is required to determine the correct tax treatment.