Service Tax Valuation - What is Gross amount and What is Total amount?
AS per Rule 2A(ii) of the Service Tax Valuation Rules, 2006, if the value has not been determined under Rule 2A(i), the service provider is required to pay service tax on the "Total amount" with the permissible abatement. Rule 2A(ii)(b) defines the total amount as:
(b) "total amount" means the sum total of the gross amount charged for the works contract and the fair market value of all goods and services supplied in or in relation to the execution of the works contract, whether or not supplied under the same contract or any other contract, after deducting-
(i) the amount charged for such goods or services, if any; and
(ii) the value added tax or sales tax, if any, levied thereon:
Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.
A Netizen asked us, If the total amount is the sum total of gross amount and the fair market value of all the goods and services, then why again deduct the amount charged for such goods and services under b(i) and b(ii)? Are they both different? If so, can someone explain?