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Service tax fa-qs

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The document discusses changes to India's service tax rate: 1. Service tax is imposed by the Indian government on services provided in India, and is collected by the service provider and paid to the government. For example, on a Rs. 1000 product with a Rs. 100 marketplace fee, service tax is calculated on the fee. 2. The service tax has increased to 14% from the previous rate of 12.36% according to the Union Budget 2015. 3. The increased 14% service tax rate will be applicable to Flipkart marketplace fees starting June 1, 2015 for all products.

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1. What is Service Tax? Service Tax is a tax imposed by Government of India on services provided in India. The service provider collects the tax and pays the same to the government. For example, if you are selling a product at Rs. 1000/- and Flipkart Marketplace fee is Rs. 100/-, the service tax is calculated on the marketplace fee of Rs. 100/-. 2. Is there a change in the service tax? Yes, the service tax has been increased to 14% from the previous 12.36% in the Union Budget 2015. 3. Will the changed service tax be applicable on all products? Yes, the increased service tax of 14% will be applicable on Flipkart Marketplace fee from June 1st, 2015. 4. If a replacement for an order that was placed before the new service tax came into effect, which service tax will be applicable on the order - the old one or the new one? In this case, we will charge the new service tax rate for the replacement order. 5. What will happen to return orders? The marketplace commission rate reversal/charges for all such orders will be applicable as per the old rate. For example, consider the forward scenarios: Order ID: ABC, Order date: 20th May 2015 Sale amount: Rs. 10000 Total marketplace fee deduction: Fixed fee: Rs. -10 Commission: Rs. -500 Shipping fee: Rs. -100 Total: Rs. -610 Service tax (@ 12.36% of MP fee):Rs. -75.4 Net settlement Rs. 9314.6
If the above order is returned by customer on June 5th 2015, the Marketplace fee reversals that will be made to your account will also be at the same 12.36% rate. That is Flipkart will take back the sale amount of Rs. 10000 and reverse you the fee of Rs. 610 and associated service tax @12.36% = 75.4 In case the order was placed on or after 1st June, then a 14% service tax would have been applied= 14% of 610 = 85.4 In case the customer requests for a replacement, after the first product is returned a new product is dispatched. This new product is treated as a new order item and the service tax rate charged will be 14% and not 12.36%.

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Service tax fa-qs

  • 1. 1. What is Service Tax? Service Tax is a tax imposed by Government of India on services provided in India. The service provider collects the tax and pays the same to the government. For example, if you are selling a product at Rs. 1000/- and Flipkart Marketplace fee is Rs. 100/-, the service tax is calculated on the marketplace fee of Rs. 100/-. 2. Is there a change in the service tax? Yes, the service tax has been increased to 14% from the previous 12.36% in the Union Budget 2015. 3. Will the changed service tax be applicable on all products? Yes, the increased service tax of 14% will be applicable on Flipkart Marketplace fee from June 1st, 2015. 4. If a replacement for an order that was placed before the new service tax came into effect, which service tax will be applicable on the order - the old one or the new one? In this case, we will charge the new service tax rate for the replacement order. 5. What will happen to return orders? The marketplace commission rate reversal/charges for all such orders will be applicable as per the old rate. For example, consider the forward scenarios: Order ID: ABC, Order date: 20th May 2015 Sale amount: Rs. 10000 Total marketplace fee deduction: Fixed fee: Rs. -10 Commission: Rs. -500 Shipping fee: Rs. -100 Total: Rs. -610 Service tax (@ 12.36% of MP fee):Rs. -75.4 Net settlement Rs. 9314.6
  • 2. If the above order is returned by customer on June 5th 2015, the Marketplace fee reversals that will be made to your account will also be at the same 12.36% rate. That is Flipkart will take back the sale amount of Rs. 10000 and reverse you the fee of Rs. 610 and associated service tax @12.36% = 75.4 In case the order was placed on or after 1st June, then a 14% service tax would have been applied= 14% of 610 = 85.4 In case the customer requests for a replacement, after the first product is returned a new product is dispatched. This new product is treated as a new order item and the service tax rate charged will be 14% and not 12.36%.