Service tax on service charge

This query is : Resolved

Report Abuse Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

09 September 2012 why we have to chage service tax on service charges and pf allowed to employees?

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
Follow

09 September 2012 If there is an Employer Employee Relationship then No Service Tax has to be paid by the Service Receiver under Reverse Charge Mechanism.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2012 Thank you.. I've joined ipcc recently under direct scheme for bcom students n going for articled training while doing one company auditing there i came across this question bt for the security charges we have received for that we have to pay service tax right bt in some agencies they wil provide pf for them and sarvice charges are incurred by the agency for pf and service why should this company pay?

Upgrade to CAclubindia Pro. Subscribe Now!

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
Follow

10 September 2012 Let me explain u in detail:

For Security Services if the Security Company is a Pvt Ltd Company and the Servicer Receiver is a Company then no Service tax has to be paid by the Service Receiver.

Say The Security Services is an Individual/ Firm or other than a Company then the Service Receiver has to pay 75% and the Service Provider 25%

Also note that in the above cases iam assuming that the Service Provider has the Security Guards in its direct employment and that the Security Company is paying the PF and ESI

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2012 ya i got it lil clear now thank you very much.. ya the security co is paying both PF and ESI bt this co has paid only 10.3%(10+3+1) not as you say 75% why it is so?

CA.Vinita Gupta

CA.Vinita Gupta (Expert)
Follow

11 September 2012 There has been a change wef 7/8/2012 75% has to be paid by Service Receiver
Say Incoice Value is 100/- Present rate of Service Tax is 12.36% so st is 12.36
25% of 12.36 Service Provider will charge and has the Liability to pay
75% of 12.36 Service Receiver has to deposit to the Dept

Querist : Anonymous

Querist : Anonymous (Querist)

12 September 2012 Yeah got it cleared now thank you very much. I think i asked too many questions it was my first audit so got so much confused