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Service tax liability- import of service

Roshani Jain (Employee) (155 Points)

16 March 2015

Hello everyone,

I have one more doubt in Service tax which i couldn't found in any service tax books. One of my client receiving service from foriegn person for that he is paying in foreign currency and also paying TDS @ 20% to government but he is paying full amount to the service provider (including TDS).

For example A is Service receiver and B is a service provider and for that fees is Rs.1,00,000/- and A is paying Rs.20000/- to government for TDS liability but he is paying 1,00,000 to service provider (not deducting TDS) so the service tax liablity will be arise on Rs.1,00,000 or Rs.1,20,000?

Service tax will be = 1,00,000*12.36/112.36

=120000*12.36/112.36

Please advice..little urgent.

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1 Replies

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 16 March 2015

As per Section 67 of the Finance Act, 1994, where provision of service is for a consideration in money, service tax is chargeable on the gross amount charged by the service provider for such service rendered by him.

“gross amount charged” includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited,.......

Therefore, as per Sec 67 TDS if any actually deducted from the value of taxable service will be included in the value of service.

But since in your case , TDS has not been deducted by s.receiver rather as per contract b/w s.provider and receiver the TDS is to be borne by s.receiver.

Therefore, value of service will br Rs. 1lacs only....and the TDS borne by s.receiver shall not form part of gross amt charged , therefore not to be included in value of taxable service.