Tax on service Income
This query is : Open
RINA GUPTA
(Querist)
08 October 2009
When a service provider submits his return, his declared income should include service tax collected?
In short, is he liable to pay income tax on service tax collected which has already been submitted to service tax dept.
In short, is he liable to pay income tax on service tax collected which has already been submitted to service tax dept.
CA SANJAY MUKHERJEE
(Expert)
08 October 2009
Hi Rina,
If you see the Profit & Loss sheet in ITR -6 u can find that in Point No. 1 u have to show Income net of sService Tax and tehn in point no. 2 u have to show service tax collected with sale/service value so total of credit as per point 5 includes Service tax.
Now you have to show the service tax paid to Govt. in point No.34 (b) so u have included in income in point 2 and now deducting the same in 34 and thus u r not paying tax on service tax.
Hope the thing is clear to u. if you require any further info please let us know.
If you see the Profit & Loss sheet in ITR -6 u can find that in Point No. 1 u have to show Income net of sService Tax and tehn in point no. 2 u have to show service tax collected with sale/service value so total of credit as per point 5 includes Service tax.
Now you have to show the service tax paid to Govt. in point No.34 (b) so u have included in income in point 2 and now deducting the same in 34 and thus u r not paying tax on service tax.
Hope the thing is clear to u. if you require any further info please let us know.
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RINA GUPTA
(Querist)
08 October 2009
Hi Sanjay,
Thanks for your valuable reply.
As per TDS rule, TDS is charged on the gross amount of bill (actual Bill + service tax), so accordingly we can claim refund for the extra tax deducted on service tax amount, provided total tax paid exceeds payable tax. Am I right?
Thanks for your valuable reply.
As per TDS rule, TDS is charged on the gross amount of bill (actual Bill + service tax), so accordingly we can claim refund for the extra tax deducted on service tax amount, provided total tax paid exceeds payable tax. Am I right?
CA SANJAY MUKHERJEE
(Expert)
08 October 2009
Yes you are absolutely correct.
However one to one relationship need not to be established.
You are calculating Taxable income excluding service tax and thus tax is computed only on value of service and then u r showing TDS on the basis of 16A form.Since TDS % is lower than tax rate of a company you still may have to pay tax after ajusting. That depends.
However one to one relationship need not to be established.
You are calculating Taxable income excluding service tax and thus tax is computed only on value of service and then u r showing TDS on the basis of 16A form.Since TDS % is lower than tax rate of a company you still may have to pay tax after ajusting. That depends.
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09 October 2009
Rina ,
Just by crediting service tax to I&E , doesnt mean that you are paying income tax on service tax . Service paid is also debited to I & E . So the setoff /input credit (difference between Service tax collected and service tax paid ) gets adjusted in the I & E .
TDS can be claimed irrespective on what it has been deducted as long as the amount on which tds is deducted is offered for tax.
As long as the tax payable is lower than TDS , refund can be claimed , no worries
Just by crediting service tax to I&E , doesnt mean that you are paying income tax on service tax . Service paid is also debited to I & E . So the setoff /input credit (difference between Service tax collected and service tax paid ) gets adjusted in the I & E .
TDS can be claimed irrespective on what it has been deducted as long as the amount on which tds is deducted is offered for tax.
As long as the tax payable is lower than TDS , refund can be claimed , no worries
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