Planning to reduce service tax to our clients...urgent sir..

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This query is : Resolved

Rajesh (Querist)

11 December 2011 Dear Experts,
We are an advertising agency. We do advertisement service to our clients. It involves some art work, event work etc. My doubt is on the way of invoicing.
1) If we give the invoice to our clients by giving the details of cost separately and service charged then is it sufficient if we charge the service tax only for the service amount alone?
2) a)While providing the details of cost of materials is it necessary to give the actuals of the cost? b) Whether can we have some profit amount in that cost components on materials and do we need not collect service tax on the profit element of the materials?

Thanks & Regards,
Rajesh

CA. BHAVIK DILIPBHAI MEHTA

CA. BHAVIK DILIPBHAI MEHTA (Expert)

18 December 2011 Replies are as follows :

1) Yes if you can seperate the material cost & service cost in the invoice then you can charge the service tax on service cost only thereby reducing the cost to your clients.

2) While providing the cost of materials you can added the cost of the components of materials. But beware of the VAT provisions. VAT rates in Gujarat state are normally 5% levied on sale of materials. Hence you will have to pay VAT on sales of materials. You will need to collect VAT & pay the same instead of service tax if you are selling VATeable materials.

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