10 August 2013
I have a query for you to solve regarding service tax. service tax input on one service can be used to set off against service tax out put on other service (For Example service tax input on security services can be set off against service tax out put on professional fees) and pay the service tax. Please solve this query to me.
Since Service tax is Indirect mode o taxing, where in services receiver is liable to pay service tax & service provider collects tax from service receiver and pays to government.
Knowingly unknowingly businessman enjoys many services, few of them are taxable & few are tax free and in the ends he pays service tax to government while utilizing any services.
So sum all service tax paid on services received by you is Input Service Tax and you can claim cenvat credit of service tax paid to meet/set-off your output tax liability.
An output tax liability arises when a businessman provides a taxable services. Here he has to pay service tax to government by collecting from receiver of services. So when you are providing any form of services, you are service provider.
Hence in given question by you: You are utilising input services of Security Agency & paying service tax e.g. Say 10K in a month. You are professional & providing professional services on which you are charging service tax e.g. say 30K.
So while making payment of 30K service tax to gvt. you can set off 10K and pay net 20k only to govt. since you have already paid 10k to government indirectly.
CAclubindia
