CHARGING OF S.T. ON GROSS OR NET

This query is : Resolved

Lalita (Querist)
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25 February 2009
My client paid to fees to his client DEDUCTING T.D.S.(PAID NET AMT) on that total amount service tax should charged(Amt+T.D.S) OR THE NET AMT SERVICE TAX CHARGED?
IN SHORT S.T. CHARGED ON GROSS AMT OR NET AMT.?

VINAYAK D PRABHU

VINAYAK D PRABHU (Expert)
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25 February 2009 Hi,
Service tax should be charged on the Gross amount including the TDS amount.
Refer to FAQ ON SERVICE TAX which is reproduced as follows:

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?

Ans.)
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.

VINAYAK D PRABHU

VINAYAK D PRABHU (Expert)
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