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Service tax and VAT Gross up

RAMESH (Expert) (93 Points)

03 September 2010

Dear Friends,

We are service provider under construction of services and opted composition scheme in Service tax and VAT payment. I have a query on how to calculate the back calculations to arrive the taxable value for Service tax and VAT.

Net amount received from customer(which includes vat and service tax) : Rs.1,00,000/-

What is taxable value for Service tax payment?

What is taxable value for VAT payment?

Please give example ...

Thanks & Regards

Ramesh

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4 Replies

Kumar Gaurav (Going...to be C.A soon...) (1624 Points)
Replied 03 September 2010

u can calculate the amount by using this:

Net amount*100/Rate of tax+100

ie: 100000*100/110.3=90,662/- is the taxable value of services

and 9338/- is service tax amount which u need to be deposited by the due date.

Correct me if i m wrong plz!

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RAMESH (Expert) (93 Points)
Replied 03 September 2010

Please confirm any one which is correct calculation.

Option 1
Back calculation for payment of Service Tax
Net Receipt	100000
Which includes 2.575% of Service tax and 1% Vat	96548.39

Basic Value	96548.39
Abetment 75%	72411.3
Taxable Value	24137.1
Tax @ 10.3%	2486.121



Back calculation for payment of VAT
Net Receipt	100000
Which includes 2.575% of Service tax and 1% Vat	96548.39

Basic Value	96548.39
Abetment 75%	72411.3
Taxable Value	24137.1
Tax @ 4%	965.4839


Option 2
Back calculation for payment of Service Tax
Net Receipt	100000
Which includes 2.575% of Service	97489.64

Basic Value	97489.64
Abetment 75%	73117.23
Taxable Value	24372.41
Tax @ 10.3%	2510.358



Back calculation for payment of VAT
Net Receipt	100000
Which includes 1% Vat	99009.9

Basic Value	99009.9
Abetment 75%	74257.43
Taxable Value	24752.48
Tax @ 4%	990.099



Option 3
Back calculation for payment of Service Tax
Net Recept	96524
Abetment 75%	72393.3
Taxable Amt - Bal 25%	24131
Service Tax @ 10.3%	2486
Taxable Value for VAT	99010
Vat 1% on Gross Value	990
Gross Receipt	100000