I have formed a company recently but not sure if we need to charge a service tax to our Clients. Any help?


#1

I have formed a company recently but not sure if we need to charge a service tax to our Clients. Any help?


#2

You haven’t mentioned the type of business your company is doing. Nevertheless every business entity that offers any kind of service or benefits to others including doing work on their behalf or offering professional advice are liable for payment of service tax. Business owners or companies are however required to apply for service tax registration and file service tax returns only when their net revenue exceeds Rs. 9 Lakhs.


#3

Hi,

Maybe you’re unsure about the difference between service charge and service tax. Service charge is taken by an establishment for offering its services to customers. It is not a tax and it is not levied by the government. It usually ranges from 5 – 20% but you as a company are free to charge any amount. In effect, if the customer avails your services, the customer will have to pay this charge whether he is satisfied with the service or not.

Service tax however is tax levied by the government. This is 14% and is payable on 40% of the total bill you charge your customers.

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