Clarification on income tax & service tax

This query is : Resolved

BIRENDRA KUMAR CHAUBEY (Querist)
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14 March 2014 Dear Sirs,

I was in government (PSU) job and I retired on 30th November 2012. After retirement, I joined a private company on 26th June 2013 as a consulting engineer. From my present employer, I receive the payment of my consultancy charges of a particular month in the first/second week of the following month. Thus, I will get the payment for my consultancy charge of March 2014 in April 2014. Please clarify my following doubts:

1. Whether the payment received by me in the month of April 2014 will be considered as my earning of FY 2013 - 2014 or FY 2014-2015?
2. My total earning as consulting engineer is Rs. 1022000.00 till now (26 June 2014 to 28th February 2014). So far, I have not claimed Service Tax from my present employer despite my payment term for "Service Tax extra" by my employer. I wish to know whether I am liable to pay Service Tax to Government? If so, on which amount, Service tax will be applicable?
3. If I do not receive Service Tax from my employer, who will be liable to pay the Service Tax, myself or my employer on my behalf?
4. If I receive Service Tax from my employer, whether Income Tax will be applicable on the total amount including Service Tax or excluding Service Tax?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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15 March 2014 1. You can follow either accrual basis or cash basis of accounting. However it is better to follow accrual basis since TDS will be deducted in MARCH for the payment made in April.

So you should show it as income of the FY 2013-14.

2. You are liable to pay service tax. However since this is your first year as service provider, service tax is applicable on the amount EXCEEDING Rs. 10 lakhs.

Collect the service tax from the employer and deposit it with the Government.

3. In case the employer does not pay the service tax, treat the total receipts INCLUSIVE of service tax. Gross up the total receipts and compute the amount of service tax.

4. Income tax will be charged on the amount EXCLUDING service tax.