Rate of service tax to be charged, Service Tax

[d.v. gupta]

dear sir , we are a NGo and registered under service tax. we are issuing bill to a company at the end of each qtr for royalty and charging service tax regularly from last 3 years. we have issued bill on 31-03-2009 for qtr 01-01-2009 to 31-03-2009. How much service tax we should charge i.e 10.30% or 12.36%. The bill date is 31-03-2009.

Posts / Replies

[Rama Krishana]

There are two concepts one is time when service is rendered second is time when bill is raised. Issuing is bill is not relevant for discharging service tax liability but the time at which service has been rendered is relevant. You need to see your agreement and contract terms in this respect. If it deems that service would be treated as rendered at the end of each quarter, you need to charge service tax at the rate of 10.3%. It is treated as rendered on the first day of quarter you need to charge 12.36%. If it is a continuous period you need to charge servcie tax on proportionate basis. Nature of transaction and time at which service has been rendered is much relevant to decide this issue.