How to calculate TDS on bill amount

Posted on 25th Jul 2018 | 1143 views

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How to Calculate TDS Bill Amount

Tax Deducted at Source (TDS) brought in by IT Department of govt , when a individual to make specified transaction as salary, commission, professional fees, interest, rent, etc. is accountable to deduct a specified percentage of tax before commencing the transaction in full to the receiver of the payment. The concept of TDS is to deduct tax at its source.

Let us take an example of TDS assuming the nature of transaction happening is professional payment on a certain rate of 10%.the company makes a transaction of Rs 50,000/- towards professional payment to certain individual, then the company shall deduct a tax of Rs 5,000/- and make a net payment of Rs 45,000/- to the individual The amount of 5,000/- deducted by company will be directly deposited to the credit of the government.

Calculation of Service Tax

Calculation of Service Tax

Basic components of service tax calculation are

Amount the gross amount charged or the gross value of your services Amount Includes Taxes

Service Tax the rate of service tax. See http://www.servicetax.gov.in/st-proc-home.html for current rates.

Education Cess

Gross Value is the value of services provided.

Gross Charge is the total amount, including taxes, charged for services.

Amount doesn’t include service tax varies slightly with the reverse mechanism except gross value of service provided is collected but not as tax but payment

Gross value of services provided

Service Tax

Rate of Education Cess

Rate of Secondary & Higher Education cess

Gross Charge to customer not including taxes. = Gross value of services provided by the service provider.

Service tax reverse calculation formula

Service tax to be paid by service recipient directly to government is call service tax reverse mechanism simply to say that the payment will include taxes

Payment includes service tax

Gross Charge to customer including taxes.

Service Tax is

Rate of Education Cess

Rate of Secondary & Higher Education Cess

Formula

Gross Charge to customer including taxes. =basic payment + Service Tax +Rate of Education Cess +Rate of Secondary & Higher Education Cess

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