Service tax

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My cousin hs an advertising agency. He hs issued invoices to his client. But client hs refused to pay serv. Tax. He's paying nly the value part. Bec of POT rules since my bro hs issued the invoice he hs to pay s.t. To govt out of his pocket. Wht remedy cn he hv nw. Also suggest tax planning in this matter for future. Thanx
Replies (4)

there nothing he can do . but if possible if he has in written that party will pay service tax on the amount agreed seperately then only he can do something to file against the buyer. otherwise he has to pay the same by his own pocket.

or issue another invoice with the amounted to rupee including service tax which agreed by both the parties but ultimately that will effect on his pocket only..!!

 

In the future, ask your brother to charge the service tax amount separately indicating that the customer is liable to pay tax. Did the customer mention in the Purchase Order or Requisition that his liability is only towards value and not service tax?

If yes, then they are correct and if no, then bro has to recover that from the customer.

Hi Divya,

It is always advisable to include service tax in the Service contract itself, clearly indicating that contract rate is excl of taxes and get the acceptance of the client.

Dear Galhot,

                      It Should be montioned Clearly in Contract that Tax is Excluding or Including, If Tax is Excluding then he should charge Service tax, 

                      as per Service tax if u r getting only amount nt service tax then it is advisiable to you that Gross up the amount with service tax rate because it should be treated as Gross Amount (Including SV Tax) as per Service tax Act. and its reduce ur tax liability.


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