Service tax on discount allowed

[sunil mehta]

A service provider prepares bill and charges service tax on 'Gross amt.' less 'discount allowed'(disccount allowed(say &5% or 10%) is as per the terms of the work order.The payment is recd. on amt. including ser.tax charged .But the ser.tax authorities says that service provider has defaulted in not collecting service tax on discount amt. Now, as per service tax provisions ser.tax is payable on amount actually recd. ,which he has paid to ser.tax dept. Whether there is any supporting case law /clarification were service tax is not liable to be paid on discount allowwed on bilss(on face of bills) by service provider?

AI Summary

Service Tax Only on Amount Received, Not on Discounts: Clarification on Service Provider's Tax Dispute A service provider questioned whether service tax should be applied to discounts offered on billed amounts. The service tax authorities claimed the provider defaulted by not collecting tax on the discount amount. Respondents in the forum suggested that service tax is payable only on the amount actually received, not on the gross billed amount. One respondent advised obtaining a written clarification from authorities, while another suggested escalating the issue to higher appellate authorities if needed. A reference to a CBEC FAQ clarified that service tax is payable only on the received amount, not the gross billed amount.