Calculation of SHEC

[Guest]

SHE cess is effective on service tax from 11.5.07. In respect of quarterly AMC payments for the period Apr-Jun'07, the bills raised and amount received in Apr'07 and hence tax paid @ 12.24%. In the light of new SHE cess effective 11.5.07, whether SHE cess is to be paid proportionately on the tax on charges relatable to the period 11.5.07 to 31.5.07? If so, how could the amount be shown in the returns?

[Brijesh Verma]

Dear Mr. Ramanujam It appears from your query that your client is a Company as it is making payment on a monthly basis. In this situation it is advised that you charge an additional 1% (0.12% of total) from the party and deposit it till 5th July and show the same as "arrears of tax paid" in the return. IN CASES of advance receipts, it is legally required to break up the amount.

[Madhukar N Hiregange]

Yes you would have to pay the same proportinately. IN ST-3 the total ST payable maybe indicated with a note that after 11th she cess has also been included.

AI Summary

SHE cess on service tax applies proportionately to the taxable period and must be collected, deposited, and disclosed in returns. The SHE cess applies proportionately to the portion of service tax attributable to the period after the cess commenced; advance receipts must be broken up to identify the cess liable portion. Collect the incremental cess from the recipient where feasible, deposit it within the prescribed remittance period, and disclose it in the service tax return-showing amounts paid as 'arrears of tax paid' and annotating the return that the cess has been included.