Service Tax on surcharge on Telephone bills - Service Tax - 29/03/99

Service Tax on surcharge on Telephone bills Service Tax Circular No. 29/3/99 Dated 15-7-1999 It has been brought to the notice of the Board that in case of delayed payments of telephone bills, surcharge is being collected on the bill amount excluding Service Tax. A doubt had arisen whether the value of taxable service shall include such surcharge. 2. The matter has been examined. As per Section 67(b) of the Finance Act, 1994, as amended, the value of the taxable service in relation to telephone connection provided to the subscriber, shall be the gross total amount charged by telegraph authority from the subscribers. As the expression used is `gross total amount charged to the subscriber', the surcharge collected from the subscriber would correctly merit inclusion in the value of taxable service for the purpose of recovery of Service Tax. 3. In view of the foregoing, it is clarified that Service Tax shall be levied on the gross bill received by the telegraph authority. If the customer pays the bill after the pay-by-date, service tax @ 5% has to be charged and collected on the bill (ex-service tax) plus surcharge.