Service tax on work contract

This query is : Resolved

RAJAT DASGUPTA (Querist)
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13 March 2014 If service Receiver is a company having service tax reg. no. & service provider is an individual & small service provider not having service tax registration. What will be the service tax implication on ser receiver as well as service provider. For Example Mr. A provide the service to ABC Ltd. for Rs. 8 lacs in fin. yr. 13-14. So what will be the service tax implication on Mr. A & ABC Ltd.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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15 March 2014 1. The service tax liability of the service provider and service recipient are distinct & separate from each other.

2. The liability of the service recipient under reverse charge is NOT dependent on the liability of the service provider.

3. The service recipient is liable to pay service tax irrespective of:

(a) The service provider has NOT charged service tax in his invoice because his turnover does not exceed Rs. 10 lakhs.

(b) The service provider is NOT registered because his turnover does not exceed Rs. 9 lakhs.

4. The service recipient has to discharge his service tax liability of 50% on Rs. 8 lakhs.

He has to comute the taxable value & pay tax @ 6.18%