Service Tax to be paid on what amount

Rajesh Poddar (Chartered Accountant) (321 Points)

26 November 2008  

A client raises the bill as follows and on which TDS is deducted :-

Bill Value Rs. 100/-

Add S.tax Rs.   12.36/-

Total bill value Rs. 112.36/-

Less TDS @ 10.3 % Rs. 11.57/-

Net amount recd Rs. 100.79/-

He is paying service tax rs. 11.08 ( 12.36/112.36*100.79) i.e he is of the opinion that the money he is receiving in the bank account is inclusive of service tax and he pays rs. 11.08/-. My query is that is he correct or should he be paying service tax of rs. 12.36/- which he has raised in his invoice.

Please Reply at the earliest

CA Rajesh Poddar