Sameer (.) (252 Points)
05 January 2011
Can we deducted discount given to customer from Gross Value of SERVICE can be deducted while
calculating Value of Service for the purpose of service tax ??
Let's say Gross Value of Service is Rs. 100.00
Discount Given to Customer 30.00
Net amount charged from Customer 70.00
Now, whether service tax has to be calculated on Rs. 70 or on Rs. 100 ?? Please clarify.
Regards
Sameer
CA Gunjan H Shah
(CA)
(230 Points)
Replied 05 January 2011
Service Tax is to paid only when any amount is actually received. In your example if you receive let's say only 50 Rs. than you need to pay service tax as if this 50 is inclusive of Service Tax. i.e
Receipt ST
110.3 10.3
50 ?
Answer would be 50*10.3/110.3 = 4.66 and rest your receipt towards value of taxable services
U S Sharma
(glidor@gmail.com)
(21056 Points)
Replied 05 January 2011
| Originally posted by : Sameer | ||
 |
Can we deducted discount given to customer from Gross Value of SERVICE can be deducted while calculating Value of Service for the purpose of service tax ?? Let's say Gross Value of Service is Rs. 100.00 Discount Given to Customer 30.00 Net amount charged from Customer 70.00 Now, whether service tax has to be calculated on Rs. 70 or on Rs. 100 ?? Please clarify. Regards Sameer |
 |
if the discounts are standard then u have deduct the same prior to invoice as contract value 100 discount 30 net 70 and make invoice only 70 as per contract.
avoid post invoice discounts to overcome the accounting and audit probs.
Deviprasad G.K.
(Consultant)
(35 Points)
Replied 05 January 2011
Hi Sameer,
As per Section 67 of the Finance Act,1994, value of taxable service shall be the gross amount charged by the service provider for the taxable service provided or to be provided by him.
Liability on discounts; Gross amount charged is taken as the basis for computation of Service tax. As per rules, payment of service tax is required on the value of taxable service received. Though discounts, in general, have not been provided with any exclusion in the Valuation Rules, the same have been held as not includible by the Tribunal. The reasoning seems to be what is received as value(less discount) for taxable service alone can be subjected to tax.
Regards
Prasad G.K
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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