Rate of service tax to be charged

[d.v. gupta]

dear sir , we are a NGo and registered under service tax. we are issuing bill to a company at the end of each qtr for royalty and charging service tax regularly from last 3 years. we have issued bill on 31-03-2009 for qtr 01-01-2009 to 31-03-2009. How much service tax we should charge i.e 10.30% or 12.36%. The bill date is 31-03-2009.

[Rama Krishana]

There are two concepts one is time when service is rendered second is time when bill is raised. Issuing is bill is not relevant for discharging service tax liability but the time at which service has been rendered is relevant. You need to see your agreement and contract terms in this respect. If it deems that service would be treated as rendered at the end of each quarter, you need to charge service tax at the rate of 10.3%. It is treated as rendered on the first day of quarter you need to charge 12.36%. If it is a continuous period you need to charge servcie tax on proportionate basis. Nature of transaction and time at which service has been rendered is much relevant to decide this issue.

AI Summary

Service Tax Rate Depends on Service Rendered Date, Not Billing Date: 10.3% or 12.36% Based on Timing An NGO registered under service tax inquired about the applicable service tax rate for a bill issued on March 31, 2009, covering the period from January 1 to March 31, 2009. The response clarified that the relevant factor is the time when the service is rendered, not when the bill is issued. If services are considered rendered at the end of the quarter, a 10.3% rate applies; if at the start, 12.36% is applicable. For continuous services, tax should be charged proportionately. The decision depends on the agreement and contract terms regarding the service rendering period.