Service Tax Charged on the Bonus amount

[Asked by Guest]

Dear Sir,

Greeting!

Our company is receiving services of Pantry Boy & Housekeeping boy from one of the renowned Facility management contractor.

Our company is going to pay Bonus to Pantry Boy & Housekeeping boy through bill submitted by the contractor.

In the bill, contractor has charged (A) Bonus Amount + (B) Service Charges on the Bonus amount @12.5% + Services Tax on both the amount (A+B) @10.3%

My query is that whether service tax should be charged on the bonus amount.

 

[YAGAY and SUN]

Dear Sir,

Service tax will be charged on the Gross Amount.

Best Regards,

Pradeep Khatri

 

 

[NEERAJ KUMAR, RANCHI]

yes service tax is payable on the gross amount received by the service providers.

 

[r.rajkumar kumar]

YES THEY WILL CHARGE SERVICE TAX AND Y HAVE TO PAY. AS PER THE ACT THERE IS NO EXEMPTION HAS GIVEN ON BONUS AMOUNT. EVEN ON BONUS AMOUNT INCOMETAX IS CHARGABALE. TKS

[Prakash Nagar]

The facility contractor has rightly charged Service tax on gross amount

[Suresh Kumar Agareal]

It is not clear from your querry if the payment of Bonus charges + service tax to the Panry boy and house keeping boy is in addition to their remuneration or not. If this payment is made on monthly basis on yearly basis. It has to be made clear if susch Bonus charges are part of their remuneration or not. If it is to be treated as part of their remuneration then surely service tax is attracted on such Bonus amount.

                                                                      Suresh Kumar Agarwal

[KASTURI SETHI]

UPDATION

Bonus amount is covered under the definition of 'consideration' under Section 67 of the Finance Act. At present also Service Tax is payable.

AI Summary

Service tax on gross amount including bonus is chargeable when bonus constitutes remuneration and is invoiced by contractors.
Multiple practitioner replies conclude service tax is chargeable on the gross amount billed by the service provider, including bonus sums invoiced through the contractor; taxability depends on whether the bonus constitutes part of the workers' remuneration. The discussion notes contractors routinely add service charges and levy service tax on the aggregate billed amount, and that bonus is treated as consideration under the Finance Act, attracting service tax.