Service Tax

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    Dear all

    Our co. A Pvt Ltd got a contract for maintenance of convention centre of Bihar govt. now A Ltd creates a Co B Pvt Ltd and subcontract the same to B Ltd. now A ltd raise bill on Bihar Govt. and further B Ltd will Raise bill on A Ltd.

    Sir Please tell me whether these contract fall under the net of Service Tax and if yes then how to do billing by each company and whether self declaration is sufficient for the purpose of appropriation of labour and material portion on contract and if no then what is the procedure of appropriation.

    Wheather A Ltd and B Ltd will be able to claim Input Service tax and if yes then how .
  2. Ochitya Poddar

    Ochitya Poddar New Member

    we run our Internet Perfomance based marketing company ( in simple words affiliate marketing company ) . We are registered as LLP. Do we have to pay the service tax? We just get commission income from e-commerce players for driving their sale by displaying the products on our website.

    If we fall into service tax, how to pay for it as we are not taxing any e-commerce company for the same and hence has to pay any tax from our pocket. How is this calculated . We are just a startup started 4 months ago.
  3. Neha Sharma

    Neha Sharma Active Member

    Dear Ochitya

    Service Tax is levied on affiliate marketing business.

    However, in case your turnover is less than Rs. 10 Lakhs p.a., service tax would not be levied in this case as small service providers with turnover less than Rs. 10 Lakhs are exempted from the levy of service tax.

    Secondly, if you are liable to pay service tax - you can collect this from the companies who are paying you as a commission. While raising the invoice, add service tax @ 12.36% and most of the companies don't mind paying additional amount towards service tax
    Ochitya Poddar likes this.
  4. Ochitya Poddar

    Ochitya Poddar New Member

    Hi Neha,

    Thank you for the valuable information. But our business model is such that we will get pre defined commission and hence cannot charge the service tax to the e-commerce sites or the network from where we are fetching the commission.

    Moreover, I wanted to ask " If we earn 11 lakhs for example so do we be charged on Rs 11 lakhs at 12.36% or at Rs 1 lakh after rebate of Rs 10 lakh.

    Also, we have income from Google Adsense ( the add we run on our website ) so will it be considered as service?
  5. Neha Sharma

    Neha Sharma Active Member

    Dear Ochitya

    1. In the example mentioned by you, Service Tax would be levied on Rs 11 Lakh

    2. If your client is not giving any additional amount as service tax, it would be assumed that the amt paid by the client is inclusive of service tax and you'll have to pay service tax from this amount itself
  6. Neha Sharma

    Neha Sharma Active Member

    Moreover, Service Tax wont be levied on your Adsense Income. Refer:

    So, while computing the turnover limit of Rs 10 Lakhs, the revenue from adsense would be excluded and only affiliate income would be taken into account
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