calculation

[Ankit Sachdeva]

how to calculate net service tax ? what are the basics of calculation?

[Rama Krishana]

Refer to section 67 of the Service Tax (Chapter V of the Finance Act, 1994), the amount received is treated as gross value and by applying reverse method you can calculate net service tax. On the other side, when you are going to raise the bill, it is advisable (if your contract is not inclusive) you should charge service tax over and above the value of services. Thereafter the gross amount received by applying the reverse formula, you may get the same result.

AI Summary

Service tax calculation: treat receipts as gross value and use reverse calculation; charge tax separately if contract not inclusive. Calculation of service tax treats amounts received as the gross value of taxable services; applying a reverse calculation isolates the tax embedded in an inclusive amount. When contracts are not inclusive, it is advisable to charge service tax separately and over and above the service value to preserve clarity and avoid valuation disputes, with the reverse formula yielding the same tax result when applied to gross receipts.