Valuation of taxable service for charging of service tax

By | November 1, 2013

Valuation of taxable service for charging of service tax

Valuation of Taxable Services: – As per substituted section 67 read with service tax (Determination of value) rules 2006 [ Inserted vide notification no. 12/2006 Dated 19/04/2006]

Determination of value of taxable services depends on mode of consideration as exhibited in the following table

SI No. Relevant Section Mode of consideration Value of taxable services
1 67(1)(i) Wholly in money Gross amount charged by the service provider  for such service provided or to be provided
2 67(1)(ii) Not wholly or partly consisting in money I.e., wholly or partly in kind Amount charged and equivalent money value of consideration in kind with the addition of service tax charged
3 67(1)(iii) Not ascertainable Equivalent to the gross amount charged to provide similar services to any other person in the ordinary course of business and the gross amount charged is a sole consideration.

Where the value cannot be determined in aforesaid ,manner equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable services as per rule 3(b) of service tax (determination of value)rules,2006

4 67(2) Where gross amount charged is inclusive of service tax payable or where the service recipient does not make payment of service tax charged due to any reason, amount realized will be treated as inclusive of service tax.

Example: if amount charged/realized is Rs. 100/- and the rate of service tax is 12.36%, service tax payable shall be 100*12.36/100+12.36 i.e. Rs. 11 and accordingly value of taxable services will be Rs. 89.

5 67(3) Gross amount shall include any amount received towards the taxable services before, during or after provision of such services.
6 67(4) Subject to the provision of above – mentioned sub section (1),(2)&(3), the value shall be determined in the prescribed manner i.e. in accordance with service tax (determination of value) rules,2006.


Explanation.—for the purposes of this section,—

(a) “Consideration” includes any amount that is payable for the taxable services provided or to be provided.

(b) “Money” includes any currency, cheque, promissory note, letter of credit, draft, pay order, travelers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value

(c) “gross amount charged” includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called “Suspense account” or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.]


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