Reverse charge

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2012 Hello Friends

i am confusing regarding Reverse charge Mechanism. my client(Company) Following Service Received.

1. Manpower Service ( Bill Rs. 50000+ Service Tax 12.36%)Chared By Service Provider.

the above Service for the period 1/07/2012 to 31/07/2012.

what will be effect if Client not Follow Reverse Charge Mechanism on this Ground that Service Provider is Charged 100% of Service Tax. so There is not Revenue Loss to Govt.

RENGARAJ R.K

RENGARAJ R.K (Expert)
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26 August 2012 The Government feels that lot of individuals sometimes firms do collect the service tax but not remitting the same in the Govt account and hence the reverse charge mechanism has been brought in. Therefore if the manpower supply agent charges 100% it is wrong. The department will ask the company to pay 75% of the value as per the Act, though it is not a revenue loss.

Pay 75% on the bill value and avail cenvat benefit.