Import of Services - Taxable Amount

[Guest]

Dear Sir, In case of services received from outside India recepient of such services is libale to pay Service Tax. In a situation, where as per agreement service receiver is liable to pay all taxes and recepient of service pays service tax, on which amount he should pay service tax? i.e. whether he should gross up the amount of service tax to calculate the liability. Apparently it seems that tax amount should be included to calculate Service Tax liability but can it be said that tax is payable only on amount charged by Service provider. Because as per Section 67 what is taxable is the gross amount charged by Service provider.

[Surender Gupta]

It is very relevant and important question related to valuation of services in the hands of person who is liable to pay service tax in the capacity of services receiver. Such amount is not a gross amount and service tax should be calculated on the amount paid to the provider of services. It should not be grossed up.

AI Summary

Valuation of imported services: service tax liability rests on the amount paid to the provider, not a grossed up sum. For imported services where the recipient is liable to pay service tax, the taxable amount is the payment made to the service provider; the recipient should not gross up the value to include the tax itself when calculating service tax liability.