Whether Service Tax Payable Considering Inclusive Bill or Exclusive?

[Vartik Choksi]

Sir/Madam,

I am a Service Provider and Have Drawn  the Bill on my Customer as Follws:

100 BAsic

10 Service Tax

2 E/C

1 SHEC

and Customer Pays me Rs/- 100 so shall i need to pay tax on 100 or assuming it to be inclusive pay 100*100/100= 90 and pay Service tax on Rs/-90 to the credit of CG.

Regards!!

[CA Rachit Agarwal]

As per Rule of Point of Taxations, 2011, you have to pay the tax as given in the bills.

As per the rule tax is payable earlier of

1. payment received

2. Bills Received.

However if final bills is 100, service tax =100*10.30%/(110.30%). According basic value is Rs. 90.66 and Service Tax is Rs. 9.34.

[NEERAJ KUMAR, RANCHI]

Dear Mr vartik

As Mr Rachit has suggested,  if you have raised bill on the basis of Rs. 100, you need to pay s tax on 100 only, however if you have received only Rs 100/- only inclusive of service tax you need to correct you bill, but this should be done within the prescribed limit as per the Point of Taxation Rule.

AI Summary

Service tax payable: determine liability by bill or receipt timing; inclusive amounts must be grossed up to derive taxable value.
Tax liability arises at the earlier of receipt of payment or issuance of the bill under the Point of Taxation rules; if an amount is paid or billed as inclusive of service tax the taxable value must be determined by grossing up the inclusive total to extract the pre-tax value and tax component, and invoices may be corrected within the prescribed period to reflect the correct taxable amount.