Value of taxable services for the purpose of assessing service tax

Any taxable service for which service tax is assessed based on its value shall:-

(a) be the gross amount charged by the service provider for the service that is being given or that is scheduled to be delivered, if the supply of the service is for consideration in money;

(b) be such an amount in money that, when added to the service tax paid, is comparable to the consideration where the service is provided for a consideration that is not entirely or partially made up of money;

(c) be the amount that may be calculated in the manner prescribed in cases where the service is being provided for a consideration that cannot be determined.

The value of a taxable service must be that amount, with the addition of tax payable, which, when added to the gross amount paid by a service provider for the service delivered or to be provided, equals the gross amount charged.

Any money received toward the taxable service before, during, or after the provision of the service is included in the gross amount charged for the taxable service.

Visit here to know more about section 80g of income tax act.

In order to comply with this clause,

(a) "consideration" refers to any payment due for taxable services rendered or to be rendered;

(b) "money" refers to all forms of payment, such as cash, checks, money orders, travellers' checks, draughts, and other similar instruments, but excludes currency retained solely for its numismatic value;

(c) "Gross amount charged" includes payments made by check, credit card, debit note, deduction from the account, and any other type of payment. It also includes any amount credited or debited, depending on the situation, to any account in the books of an individual who must pay service tax, whether it is called a "Suspense account" or by any other name.

Value of a certain expense or cost included or excluded

When a service provider incurs costs while delivering a taxable service, all such expenditures must be considered part of the consideration for the taxable service delivered or to be provided and must be included in the value in order to charge service tax on the aforementioned service.

If all of the following requirements are met, the cost or expenses spent by the service provider acting solely as the service recipient's agent shall be removed from the value of the taxable service:-

(a) When paying a third party for the products or services obtained, the service provider I serve as the recipient of the service's pure agent;

(b) the service receiver accepts and makes use of the products or services obtained in this manner by the service provider acting only as the recipient of the service's agent;

(c) The service receiver is responsible for paying the third party;

(d) The client gives the service provider permission to pay the client on his behalf;

(e) The service recipient is aware that the third party will supply the products and services for which payment has been received by the service provider;

(f) The invoice the service provider sent to the service recipient specifically states the payment the service provider made on the service recipient's behalf;

(g) The service provider only seeks reimbursement from the service consumer for amounts he has already paid to a third party; and

(h) In addition to the services he performs on his own behalf, the service provider may also get products or services from a third person acting as a pure agent of the service recipient.

More Information about 12a.