Liability of service tax & tds

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Akhilesh (Querist)
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29 November 2011 I am making paymnet to foreign compnay for services rendered by him in connection with installation of machinary.He doesn't have PAN. He simply raise the bill of Rs say 100,000. how much service tax i have to pay on his behalf & also amount of tds to be deposited on his behalf. provide me also the calculation for both working.

CA Abhishek Rana

CA Abhishek Rana (Expert)
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01 December 2011 Dear Akhilesh,
Service tax need to be paid @ 10.3 %. Compute amount by grossing up Rs. 100/- as 111.48.

With holding taxes @ 20% , if applicable shall be computed as follows:
Gross amount- 139.35 ( gross up of 111.48)

Akhilesh

Akhilesh (Querist)
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02 December 2011 As far as service tax is concern it is Ok but for tds purpose i think aganin grossing up is not correct, tds is to be deducted on gorssing up of Rs 125 only i.e tds of Rs 25 (100*100/80).
plz, quote any circular/notification in support of your answer, if any

CA Abhishek Rana

CA Abhishek Rana (Expert)
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02 December 2011 Dear Akhilesh,
this is not so, as direct tax is imposed on the total amount of basic value and indirect tax.Take example, when we deduct tds in case of services liable for service tax, we deduct tds on gross amount , inclusive of service tax.

Akhilesh

Akhilesh (Querist)
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05 December 2011 Dear Abhishek you are right when service tax is charged by service provider in his invoice, but in my case he didn't charged any service tax in his invoice, so why we should pay tds on service tax amount. ur views plz.

CA Abhishek Rana

CA Abhishek Rana (Expert)
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05 December 2011 TDS is deducted on gross amount. In ur case the gross amount is including service tax. Hence, Grossing up will be done on aggregate of basic value plus service tax.

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