12 October 2012
In case of reverse charge where the service reciever shall pay service tax. Is the service tax to be calculated on gross amount+TDS or only on the gross amount where the TDS is also borne by the service reciever?? Eg. Rs. 10,000 gross amount Rs. 2500 TDS Will service tax be calculated on 12500 or only 10,000???
18 October 2012
The rule is that to effect TDS, it is the Gross Amount Charged on which tds rate to be applied. In the RCM case, the service provider is not entitled to charge ST( to the extent specified in rules), hence the ST to be paid by Service Recipient does not form part of Gross Amount charged by Service Provider and therefore, you are not required to consider TDS on ST amount. In other words, deduct tax at source at the rate specified only the Billed Amount( which does not contain ST here) Hope the matter is clear.
CAclubindia
