Discount on Value of Service (Valuation of Service)

Service Tax is to paid only when any amount is actually received. In your example if you receive let's say only 50 Rs. than you need to pay service tax as if this 50 is inclusive of Service Tax. i.e  

Receipt             ST

110.3                  10.3

50                              ?

Answer would be 50*10.3/110.3 = 4.66 and rest your receipt towards value of taxable services

Originally posted by : Sameer
	Can we deducted discount given to customer from Gross Value of SERVICE can be deducted while calculating Value of Service for the purpose of service tax ?? Let's say Gross Value of Service is Rs.           100.00 Discount Given to Customer                                30.00 Net amount charged from Customer                  70.00 Now, whether service tax has to be calculated on Rs. 70  or on Rs. 100  ??    Please clarify. Regards Sameer

if the discounts are standard then u have deduct the same prior to invoice as contract value 100 discount 30 net 70 and make invoice only 70 as per contract. 

avoid post invoice discounts to overcome the accounting and audit probs.

Hi Sameer,

As per Section 67 of the Finance Act,1994, value of taxable service shall be the gross amount charged by the service provider for the taxable service provided or to be provided by him.

Liability on discounts; Gross amount charged is taken as the basis for computation of Service tax. As per rules, payment of service tax is required on the value of taxable service received. Though discounts, in general, have not been provided with any exclusion in the Valuation Rules, the same have been held as not includible by the Tribunal. The reasoning seems to be what is received as value(less discount) for taxable service alone can be subjected to tax.

Regards

Prasad G.K