Confused About Service Tax in Offer Letter: Should My Company Cover It or Do I Bill Them?

Understanding Tax Obligations in Offer Letters

If my offer letter lists out the breakup of components and then there is a taxation section, it indicates I need to pay my taxes based on the tax laws. The company later indicated it pays Income and Profession Tax, so now my concern is whether they would pay service tax. I am not proficient in tax lingo, so can Service Tax be assumed to be part of Income/Profession Tax, or would I need to be specifically told that service tax will be taken care of by them, or would I need to bill them if I ended up paying it?

Regards,
chillum

Thanks, pon1965. Someone mentioned to me to ask if I will be working as a consultant and I should find out if I will be given a Form 92 or 94 at the end of the year. I believe one of them means Service Tax will be paid by me.

Understanding Tax Obligations for Salaried and Consultant Roles

If you are a salaried employee, you don't need to pay service tax. Only income tax and professional tax shall be payable by you, which shall be deducted by your employer and deposited with the government.

In case you are working as a consultant and receiving professional fees, you need to pay service tax yourself. The same can be charged to your client in the bills itself. The client shall make payment along with service tax after deducting TDS (income tax).

Hope this helps you.

Thanks & Regards,

Avika Kapoor
Assistant General Manager - Business Development
Website: http://www.kapgrow.com

Dear Sir, I am working in an organization where I receive a portion as salary and the remaining part as consultation fees (over Rs 10 lakhs annually). I pay income tax after preparing balance sheets, P/L accounts, etc. Should I also pay service tax? Can anybody help me out, please?

Regards, Hriday K Das [Phone Number Removed For Privacy Reasons]

The scenario given is not clear. You are working as an employee and as a consultant, but how? Can you illustrate your position in the company and the position of the company, as the situation given "I am paying income tax after preparing balance sheet, P/L account, etc." is confusing?

From the taxation point of view, your gross receipts are more than 10 lakhs; therefore, you are required to get a registration number with the department and deposit the service tax at the applicable rate.

Service Tax Payment Responsibilities

75% of the Service Tax amount shall be paid by the company, and the remaining 25% shall be paid by the Service Provider. This applies to cases where the Service Provider is a Proprietor or a Partnership firm and is not applicable to Pvt. Ltd.

Is there any notification that mentions that companies are not included in this provision?