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Regarding TAX Pay

16 March 2009

Hi,

We have started a company in partnership, we run Non-Voice Process like Data Entry, Data COnversions etc...We have a client, from where we get Raw Data to work on. I would like to know, will we have to pay STax or the client deduct the STax and provide us the billing.

If we have to deduct here, how much would that be, Percentage?

Can you help me out.....

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4 Replies

SIDDHARTHA SANKAR ROY (Government Servant -MOF) (868 Points)
Replied 16 March 2009

If you are having a BPO through which your providing data entry, data conversion services to your clients, then your services should be covered under Business Support Service w.e.f 16.05.2008.If you are providing these services to any domestic client, then you have to collect the tax at the prevailing rate from your client and submit to the Department. However, if you are providing these services to overseas clients then it would be covered under export of service and you need not pay any tax for provision of such services.

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Vimal Jos Andrews (BDM) (26 Points)
Replied 17 March 2009

Hi SIDDHARTHA,

One of our client here in Inda, have charged us 4.03% along with the billing amount. And said that later we can get that amount refunded. What would be that, i remember somthing like TOS , dont know.

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 17 March 2009

It appears that you are an Indian company, so the service provider has charged the service tax. As you are exporting the service, it becomes your input service used in export of services, which you can claim as refund under Notification 41/2007.

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 30 March 2009

Vimal- Plz refer to your mail to me;

You are providing information technology service in Chennai. Your client is in Kerala. You are providing this service, which is taxable under service tax law. You should take registration and start paying service tax. (service tax is exempted upto service value of Rs. 10 Lakhs, if your turnover in last year was less than 10 Lakhs). You should charge service tax in your invoices, and deposit the amount with thegovernment.

As, the payment made to you by your client is a payment for a contractual work, the payer shall deduct a TDS amount from the payment made to you under Section 194C of the Income Tax Act.

These two taxes are separate and separately administered. For example, if value of your service is Rs. 100 (contract value), then you will charge a service tax of Rs. 10.30 on your invoice and pay this amount as service tax. While making payment to you of Rs. 110.30, your client will deduct TDS. On receipt of payment you will pay service tax of Rs. 10.30.