23 July 2011
We have received bill of Rs.1 lac for sponsorship service .It does not include any service tax. We have to pay service tax on the same. So.Please guide whether to calculate service tax of 10.3% directly on Rs.1 lac i.e Rs.10300/- or on reverse method of 100000/89.70*10.3 = Rs.11482/
23 July 2011
Sponsorship service is not covered under reverse charge method.Hence, it may be so that service provider is small service provider & exempted from payment of service tax. However, it will be prudent to obtain undertaking from service provider duly endorsed by department in this regard. Alternatively, service tax of Rs9338/- may be calculated on back calculation method & balance Rs.90662/- paid to service provider.
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