Method of calculation of service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 April 2015 there is a party providing legal service
party produce bill of Rs 600000
in bill not mention service tax component

now second party need to caculate service tax

which option should second party apply for calculating ST

Option 1

ST= 600000@12.36%

Option 2

ST = 600000@12.36/112.36

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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05 April 2015 Service Tax applicable under Reverse Charge.

Service Tax @ 12.36% of Rs 600000/-
= Rs 74160.

Kaushik Joshi

Kaushik Joshi (Expert)
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05 April 2015 In case where no service tax component is separately mentioned in the invoice, the amount of Rs.600000/- above is considered as inclusive of service tax.
Hence, Option 2,i.e.
ST=600000@12.36/112.36 applies in your case.
Also It would be wise for you to confirm with the legal firm regarding the amount of service tax and the professional fee payable by you and the method you wish to adopt.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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06 April 2015 Incase you have to calculate service tax under RCM, you need to calculate the service tax on total value of Rs.6 Lakhs as advice Mr. Sanjay ji.

If it is regular service tax (other than RCM category) if party is not mentioned the service tax separately, you have to refer the agreement between you and the party,if the agreement says the price is inclusive of service tax then you can do the back calculation, if the agreement service tax applicable extra. then you can do the option 1.