19 November 2012
Suppose I am importing certain services which are subject to service tax in INdia under reverse charge mechanism. On these services, the payments are made as under :
Service charges Rs. 100 TDS on above (paid over & above the above & not deducted from the service charges) Rs. 11
In normal cases service tax under reverse charge mechanism is to be paid on the total value of services (including any withheld taxes). So suppose in above case Rs. 100/- being invoice value, we deducted taxes of Rs. 10/- & pay Rs. 90/- to the service provider, then service tax is to be paid on Rs. 100/- & not on Rs. 90/-. But in the present case, nothing is withheld from the invoice value but TDS is paid over & above the invoice value.
Query : In this case will service tax be paid on Rs. 100/- (i.e. invoice value) or on 111/- (i.e. invoice value plus TDS)?
19 November 2012
The consideration you are giving is Rs. 111 (Because TDS will also be credited to Service Provider only). So you have to pay Service tax on Rs. 111
CAclubindia
