Input service tax

What ever is the bill amount you would have charged you have charged service tax on it and by recovering transportation in your bill. You woould have recovered the service tax on entire bill amount. So automatically you have recovered the service on transportation. So yes you can do it and you have also done it

hi Hitesh,

Mr A is not charging the servcie tax on transportation component from the client. He is charging service tax only on agency charges. Regarding the transportation charges they are being billed on actual basis to client. In this case can the input service tax benefit be taken for service tax paid to Mr B.

e.g. Mr A gets invoice from Mr B regarding transportation as below

Transportation Charges : 1000

Service Tax                     : 123.60

So entry is  :

Transportation Charges Dr 1000

Input Service Tax          Dr 123.60

       Mr B                                        1123.60

 

Now Mr B send the full invoice of clearing the consignment as below :

Customer Dr  2123.60

    Transportation Charges  Cr             :  1000

    Agency Charges              Cr            :  1000

    Service Tax on Agency Charge Cr  :    123.60

 

Dear Sushil, Service tax is calculated on gross amount I.e. Rs 2000 and not on the service rendered by you I.e Rs 1000. So service tax calculation must on Rs 2000 which comes to Rs 247(approx). Yes u can service tax set off even if you have not recovered not transportation. Make next billing must be done on gross amount.