14 October 2009
We are paying Service tax under CONSULTING ENGG. for our Foreign consultant and we paying the service tax on behalf of our consultant. we have the agreement for consultation, as per the agreement the local taxs are extra. He will raise the invoice and we will make the payment gross amount billed by our consultant.
in this case where we have to compute the gross amount?. It is inculusive of TDS are with out TDS, If it is inculusive ot TDS under which rule it should be?
15 October 2009
Service tax will be calculated on the gross amount paid inclusive or TDS.
It is to be noted that the payment aspect is a considerable aspect as long as payment is with respect to rendering of services.
Normally when we pay to our local vendor though we deduct TDS we still pay on the gross amount.
In your case the gross amount will be Invoice amount + TDS.
Just because the same has not been charged the agreement clearly states local taxs are extra which implies that service tax shall be on the gross amount paid to the service provider as per the terms of the agreement / arrangement
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