Service tax in case of consideration is partly in money

 

Example given for service taxing in case of consideration is partly in money and partly in any other form 

 

This is the example given in PCC studymaterial

 

 

Example : Mr. X, a company secretary provides taxable professional services to one of its

clients. In lieu of rendering such services, Mr. X charges Rs.10,000 from its client and

also asks its client to give him a Law book worth Rs.2,360. The total consideration in this

case will be Rs.12,360 and the value of the taxable service shall be Rs.10,000[ 12360*100/112.36] and Rs.2,360 shall be the service tax payable.

 

calculation given in bracket will give only 11000 but  how the tax came to be 2360??????

Replies (3)

Back calculation has to be done for arriving at the service tax component.

Amount received in cash - 10,000/- + 2,360/- received as books.

Total amount received - Rs.12,360/-.  This amount includes service tax component, which is calculated as given below:-

12360/110.30*100 = Rs.11,206/-  This amount is net of service tax. So service tax has to be added on this.  Rs.11,206/- *10.3% - Rs.1,154/-.

Total consideration is Rs.11,206/- + 1,154/- service tax component.   He has to pay service tax payment of Rs.1,154/- to the  service tax department.

 

Regards

Ramesh

why you are working on outdated tax rate?

Great Manjith,

The question was raised by you with an outdated tax rate.   I have just arrived at the figures mentioned in your query, it is not my imagination

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