Confused About Service Tax and TDS Calculations? Let's Break It Down Together

If the bill value is Rs. 2,40,000, the service tax is Rs. 24,720 (10.3% of 240,000), and the TDS is 2% of (240,000 + 29,664), amounting to Rs. 5,294.40. The total outstanding amount from the client is Rs. 2,59,425.60 (240,000 + 29,664 - 5,393.28). In this calculation, we find that the service tax to be paid is Rs. 29,664. Is this correct or not?

Hi, the invoice raised to a client is as follows:

Invoice Details

- Professional fee: INR 2,40,000/-
- Service Tax @ 10.3%: INR 24,720/-
- Total amount: INR 2,64,720

TDS is deducted at the rate of 10% on the total invoice amount, i.e., INR 26,472. This is a common practice among companies that avail these services. Based on this invoice amount, you need to pay the service tax mentioned above.

Thanks,
Sanjay

Thank you very much, Sanjay. However, now the client is also calculating TDS at 2% of the total bill value, whereas another company deducts only 1%. Could you please inform me about the provisions and rules regarding this?

Service Tax and TDS Calculation

Service tax is calculated on the invoice amount raised to the client. Some clients deduct TDS on the service provided amount but not on the total invoice amount, including the service tax. Hence, you will notice the difference in deduction from company to company.

Thanks,
Sanjay

I am working in a construction company. Our company builds cement plants. If our company completes a project in 5 years, we will bill monthly. We will complete 100% of the work in one month and add a 10.3% service tax. The TDS certificate will be issued to the client (cement company). The TDS certificate is calculated at 1% or 2%. The client will not pay bill-wise; they will pay in the current year or mostly the next year. According to their calculation, they provide service tax separately (10.3% of the bill value). We received the 2010-2011 bill amount through the bank, so we would pay the service tax based on the bank receipt or the service tax received (their client statement shows service tax on 6 bills added together).

If the bank receipt is Rs. 1,00,000, but the service tax against the bill value is Rs. 75,000, should we calculate the service tax based on the receipt side or the service tax received basis? Please advise.

Can anyone provide me with a service tax calculation sheet, including CENVAT? I would be grateful as it will help me understand the practical situation of service tax.

Service Tax Payment Timing

Service providers should make the payment of service tax at the time of raising the invoice to the clients or upon completion of the service. Has the service tax regulation been amended to allow the service provider to make the payment of service tax upon receipt of the payment from clients, as per the entry in the books of account or credit of the amount in the bank account? Which is correct? Please tell me.

Service tax is paid after the amount is collected from the service receiver. Please do check SERVICE TAX PAYMENT DUE DATE FREQUENTLY ASKED QUESTIONS | SIMPLE TAX INDIA to know more about the technical details on service tax and its payment cycle dates. Hope the above link will answer most of your queries.

Regards,
Sanjay

Dear Venkataratnam,

Service Tax is payable on the bill amount of Rs. 240,000 only. Service Tax is not payable on the Service Tax levied by you. Therefore, you should calculate the Service Tax on the bill amount of Rs. 240,000 at the appropriate rates.

Best regards