Hello All,
Want to know the calcualtion of Service tax when there is a abtament for a service:
1.Option 1: When there is a 50% abatement for a service
Service Value: Rs.1000/-
Can i calculalte 5% on Rs.1000/- (Directly then Add Education and Secondary Education Cess)
Or
2. Option 2: Rs.1000/-
Calculate 50% on the above Value then on Rs.500/- calculate 10 % and 2% , 1%.
Kinldy comment on the above options
I will go with Option-2.................... Which is right way !!!!!!!!!!!
But in the both option Service tax libility will remain same
abatement @ 50% is calculated on gross service value i.e. rs.1000 . ST @ 10.3% is applied on net taxable service i.e on rs 500.
1st take abatement on amount then only calculate the tax liability.
not able to under
Since Service tax is applicable only on Taxable service, that is only after abatement, so Option "B" will be more appropriate
As per the essense of the text of law ..abatement has been introdued on the value...no where in the law it is written that tax rate can be abated. so tax rate being fixed and value has to be abated.
Option 2 is the correct way
| Originally posted by : Kunal Agrawal | ||
 |
Hi! I will go with option B as technically abatement is provided in respect of VALUE OF TAXABLE SERCICES and not for TAX RATE. Tax rate is uniform for all taxable services. |
 |
agreed with kunal
Option No. 2 is Correct.
As per Service Tax Rules, Abatement is on the VALUE of TAXABLE SERVICE.
It is NOT on the RATE of Tax.
| Originally posted by : Karan Gosain | ||
|
Option No. 2 is Correct. As per Service Tax Rules, Abatement is on the VALUE of TAXABLE SERVICE. It is NOT on the RATE of Tax. |
|
2nd is currect.
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