Service Tax Calculation

Here is something I recently found out, thanks to being an Entrepreneur!

I invoiced one of my customers for X amount. The current service tax is 10.3%. The total invoice value hence is X+Y(Service Tax component). Then, my customer deducts 10% TDS. Here comes the fun part.

I thought, the TDS has to be on the invoice value. i.e, X. But, my customer deducted TDS on the total amount. i.e, X+Y.

Technically, it should have been on X. I checked with my auditor and he said there is a confusion in this regard. People to play safe and be out of trouble, they include service tax component while deducting TDS.

This is what happens when there is no clarity among the various departments on the taxation!