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Do I have to charge Service Tax for Consultancy Services?


Hi CAs,
I've just set up an Pty Ltd company and intend to do some consultancy work (on a day rate) for another like minded Indian company, could you tell me how much tax i should be charging them or should they deduct TDS on my behalf?
I'm really confused!

Thanks,

Mell

 
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Chartered Accountant


yes u have to charge service tax for your consultancy services @ 10.30% you have provided. later when you receive your payment it will be net of TDS i.e TDS will be deducted @ 11.33% .

 

 
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Chartered Accountant


The initial exemption of 10 Lakhs would be admissible provided that your previous years taxable services provided was less than 10 Lakhs.

 
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Originally posted by :chintan
"

yes u have to charge service tax for your consultancy services @ 10.30% you have provided. later when you receive your payment it will be net of TDS i.e TDS will be deducted @ 11.33% .
 

Many thanks Chintan.

So just to clarify, e.g., if I charge Rs.10,000, then I need to invoice the client for Rs. 11,030 (+10.3%). But i will only receive Rs. 8867 (10,000 - less 11.33%) + Rs1030 (Sales tax 10.3%)?  

"


 

 
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Originally posted by :Madhukar N Hiregange
" The initial exemption of 10 Lakhs would be admissible provided that your previous years taxable services provided was less than 10 Lakhs. "


 

Thanks also Madhukar! So would it be correct for me not to charge sales tax until i hit the 10 Lakh mark?

 
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Dear Mell,

Sales Tax is on sale of Product.. Service Tax arises on providing of services. The service tax liability starts if u cross the initial slab of Rs.10 lakh on annuity basis.

UR Client will deduct tds @   10.30 % (in case of Individual or sole propritorship).

Tds deducted by ur client is an advance tax. U can claim expenses to reduce ur gain from professions and claim the tds deducted as refund from Income Tax department.

 

 

 
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Associate manager


I am getting consultancy charges monthly deducting the service tax @ 10.3% though my package is Rs 215000.00 annualy. Earlier it was Rs 200000.00 From 2007-2008. Please give the experts opinion whether it is correct or not.

 

Vishwanath Mundhra

Kolkata

M: 9432215475

 
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glidor@gmail.com


Originally posted by : Vishwanath Mundhra

I am getting consultancy charges monthly deducting the service tax @ 10.3% though my package is Rs 215000.00 annualy. Earlier it was Rs 200000.00 From 2007-2008. Please give the experts opinion whether it is correct or not.

 

Vishwanath Mundhra

Kolkata

M: 9432215475

service tax is not a deductible tax, it can be either exempted or charged.

 

at 2.15 lacs per year,  no question of service tax

 

check carefully your payment is deducted for incometax TDS, which is tax credit to be set off at the time of filing your incometax return.


Total thanks : 1 times

 
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Consultant


I am planning to provide some consultancy to a firm based on hourly rate. What exactly needs to be done so that I get maximum tax benefit.. I would not exceed 10 lakh rupess /year.  Do I need to charge them service tax. Also would they be deduction any tax if I have an individual proprietary firm. Also lets say if I do exceed 10 lakh rupess income, should I split the income b/n two firms so that I dont get in service tax issues.

 

Please provide me some numerical answers let say  I charge 75,000 rs / month what happens as an individual proprietary firm

Also what happens if I exceed 10 lakh rs /annum, let say I need to charge 150,00 rs//month

 

Please explain?

 
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