Is service tax payable ?
This query is : Resolved
21 November 2010
Mr. A provide taxable service to mr. B Rs. 50000/- Gross amount and Mr. b goes insolvent and no amount is recovered
will it be included in taxable service ?
Is service tax payable on it ?
Mr. A provide taxable service to mr. B Rs. 50000/- Gross amount and Mr. b goes insolvent and no amount is recovered
will it be included in taxable service ?
Is service tax payable on it ?
21 November 2010
http://www.servicetax.gov.in/overview/ovw_pt-4.htm
Under Section 67 of the Finance Act, 1994, Service Tax is levied on the gross or aggregate amount charged by the service provider on the receiver. However, in terms of Rule 6 of Service Tax Rules, 1994, the tax is permitted to be paid on the value received. This has been done to ensure that providers of professional services are not inconvenienced, as in many cases, the entire amount charged/billed may not be received by the service provider and calling upon him to pay the tax on the billed amount in advance would have the effect of asking him to pay from his own pocket. It would also make the levy a direct tax, which is against the very scheme of Service Tax.
Under Section 67 of the Finance Act, 1994, Service Tax is levied on the gross or aggregate amount charged by the service provider on the receiver. However, in terms of Rule 6 of Service Tax Rules, 1994, the tax is permitted to be paid on the value received. This has been done to ensure that providers of professional services are not inconvenienced, as in many cases, the entire amount charged/billed may not be received by the service provider and calling upon him to pay the tax on the billed amount in advance would have the effect of asking him to pay from his own pocket. It would also make the levy a direct tax, which is against the very scheme of Service Tax.
22 November 2010
will it be include in the list of taxable service provided ?
22 November 2010
As per my opinion NO
22 November 2010
Ankit ji, i m really thankful for your answer
Thanks for previous query
Please answer this
Q1. Service provided to RBI Worth Rs.25 lacs,
Service is exempted, so will it be included in service provided ?
Q2. What are "ASSOCAITED ENTERPRISES" ?
Q3. Mr. A Provide taxable service to Nr. B worth Rs. 25000/-
In consideration Mr. A Provide Rs. 15000 and Rs. his bike for Rs. 10000/-
On what amount service tax will be charged, and what is the amount of taxable service to be provided ?
Thanks for previous query
Please answer this
Q1. Service provided to RBI Worth Rs.25 lacs,
Service is exempted, so will it be included in service provided ?
Q2. What are "ASSOCAITED ENTERPRISES" ?
Q3. Mr. A Provide taxable service to Nr. B worth Rs. 25000/-
In consideration Mr. A Provide Rs. 15000 and Rs. his bike for Rs. 10000/-
On what amount service tax will be charged, and what is the amount of taxable service to be provided ?
01 August 2024
### 1. Service Tax on Insolvent Debtor
When a service provider like Mr. A renders a taxable service to Mr. B and Mr. B becomes insolvent and cannot pay, the treatment of Service Tax depends on several factors:
- **Service Tax Payable**: Service Tax is generally payable on the value of services rendered, irrespective of whether the payment is eventually received or not. In the event of insolvency, the Service Tax liability on the amount billed is still applicable.
- **Taxable Service Inclusion**: The service provided will still be included in the taxable services provided, and Mr. A would need to discharge the Service Tax liability. However, Mr. A may explore provisions related to bad debts or write-offs in the tax laws for recovery purposes.
### 2. Service Provided to RBI
- **Exemption**: If the service provided to the Reserve Bank of India (RBI) is exempt from Service Tax, it is not included in the taxable service for the purpose of calculating Service Tax. The exempt service amount is generally excluded from the calculation of Service Tax liabilities.
- **Inclusion in Service Provided**: For records and reporting, the exempt service may still be noted but does not attract Service Tax.
### 3. Associated Enterprises
- **Definition**: "Associated Enterprises" are entities that are related to each other through common ownership or control. This term often refers to companies or entities that have significant common ownership, shareholding, or control, such as parent and subsidiary companies, or entities controlled by common interests or individuals.
### 4. Service Tax Calculation on Mixed Consideration
For the case where Mr. A provides a taxable service to Mr. B worth ₹25,000 and receives consideration partly in cash and partly in kind:
- **Consideration Received**:
- ₹15,000 in cash
- ₹10,000 in kind (e.g., bike)
- **Taxable Amount**:
- **Total Consideration**: ₹25,000 (total value of service)
- **Service Tax Calculation**: Service Tax is applicable on the full amount of ₹25,000, which is the total consideration for the taxable service. The amount of Service Tax would be calculated based on the applicable rate (e.g., 15% before GST, now subject to GST rates).
### Summary
1. **Insolvency**: Service Tax is still payable on the gross amount billed, even if the payment is not recovered due to insolvency. The service remains part of taxable services provided.
2. **Service to RBI**: Exempt services are not included in the taxable service amount but should be documented appropriately.
3. **Associated Enterprises**: Refers to entities related through common ownership or control.
4. **Mixed Consideration**: Service Tax is calculated on the total consideration of ₹25,000, including both cash and in-kind payment.
When a service provider like Mr. A renders a taxable service to Mr. B and Mr. B becomes insolvent and cannot pay, the treatment of Service Tax depends on several factors:
- **Service Tax Payable**: Service Tax is generally payable on the value of services rendered, irrespective of whether the payment is eventually received or not. In the event of insolvency, the Service Tax liability on the amount billed is still applicable.
- **Taxable Service Inclusion**: The service provided will still be included in the taxable services provided, and Mr. A would need to discharge the Service Tax liability. However, Mr. A may explore provisions related to bad debts or write-offs in the tax laws for recovery purposes.
### 2. Service Provided to RBI
- **Exemption**: If the service provided to the Reserve Bank of India (RBI) is exempt from Service Tax, it is not included in the taxable service for the purpose of calculating Service Tax. The exempt service amount is generally excluded from the calculation of Service Tax liabilities.
- **Inclusion in Service Provided**: For records and reporting, the exempt service may still be noted but does not attract Service Tax.
### 3. Associated Enterprises
- **Definition**: "Associated Enterprises" are entities that are related to each other through common ownership or control. This term often refers to companies or entities that have significant common ownership, shareholding, or control, such as parent and subsidiary companies, or entities controlled by common interests or individuals.
### 4. Service Tax Calculation on Mixed Consideration
For the case where Mr. A provides a taxable service to Mr. B worth ₹25,000 and receives consideration partly in cash and partly in kind:
- **Consideration Received**:
- ₹15,000 in cash
- ₹10,000 in kind (e.g., bike)
- **Taxable Amount**:
- **Total Consideration**: ₹25,000 (total value of service)
- **Service Tax Calculation**: Service Tax is applicable on the full amount of ₹25,000, which is the total consideration for the taxable service. The amount of Service Tax would be calculated based on the applicable rate (e.g., 15% before GST, now subject to GST rates).
### Summary
1. **Insolvency**: Service Tax is still payable on the gross amount billed, even if the payment is not recovered due to insolvency. The service remains part of taxable services provided.
2. **Service to RBI**: Exempt services are not included in the taxable service amount but should be documented appropriately.
3. **Associated Enterprises**: Refers to entities related through common ownership or control.
4. **Mixed Consideration**: Service Tax is calculated on the total consideration of ₹25,000, including both cash and in-kind payment.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- TDS U/S. 194NF
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- Applicable TDS rate for sale of property in Nov 2024
- Donation Receipt u/s 80G
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
Trending Online Classes
CAclubindia
