Service tax query

Dear Mr. Mridul,

Here are the answers:

For Q1 & Q2: Service tax is applicable on the gross amount received from the government.

For Q3: Service tax is applicable at the time of receiving advance from the government.

Further to add that PSU can take cenvat credit on service tax paid on input service received from sub contractor and can adjust that cenvat credit for payment of service tax payable on gross amount.

Thus, ultimately the net liability will be paid on net profit earn or value addition in service charges. 

Rajeev Kumar Garg

(M.Com, L.L.B.)

Consultant (Excise, Customs & Service Tax)

Ph. No. 7500802402.

Agree with Mr. Garg...