taxable value under service tax

[N R CONSULTING N R CONSULTING]

A service receiver has received technical  consultancy services from abroad. What should be the taxable value for service tax - ? The bill amount or the bill amount inclusive of TDS(withholding tax).

[JAMES PG]

Taxable value will be the  foreign currency value at which Bank makes remittance plus TDS.

The rate of exchange will be the rate notified by Customs and not the rate adopted by Banks

[N R CONSULTING N R CONSULTING]

Sir,

Thanks for the information.

[rishi mohan]

As per section 67, in case where the consideration for the service is in terms of money then service tax shall be charged on the gross amount charged by the service provider for the service provided or to be provided. If the consideration for a taxable service is not wholly or partly in terms of money, then the value of such service shall be such amount in money, with the addition of Service tax charged is equivalent to the consideration.

[JAMES PG]

 

Answer to the query published in the FAQ published by CBEC is given below :

3.12 When payment is made by a client to an assessee after deducting his Income Tax liability under the Tax deduction at source (TDS) provision, whether the Service Tax liability of the assessee is only towards the amount actually received from that client or tax is to be paid on the amount including the Income Tax deducted at source also?

Service Tax is to be paid on the gross value of taxable service which is charged by a Service Tax assessee for providing a taxable service. Income tax deducted at source is includible in the charged amount. Therefore, service Tax is payable on the gross amount including the amount of Income Tax deducted at source also.

 

[Vijay kumar]

Dear Sir, the provisions of Section 67 are applicable to Section 66A also and accordingly, the taxable value is inclusive of the TDS, since that is the gross amount representing the service, whether or not it is paid to the service provider.

AI Summary

Taxable value inclusion of TDS: service tax payable on gross value including withheld tax for cross-border services.
Taxable value for imported technical consultancy services is the gross amount charged by the service provider, inclusive of income tax deducted at source; the foreign currency value is the remittance amount plus the withheld tax, converted at the exchange rate notified by customs.