Tds on reverse mechanism (service tax)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 March 2013 Sir,

Kindly solve the issue pertaining to reverse mechanism used in service tax from FY-12-13

If I appoint a contractor for civil work where the service tax is charged is charged @ 4.94% on bill value (Rs. 100) and the agency is a partnership firm. The bill raise by the agency is Rs. 104.94 in Tax Invoice, where I have made a reverse calculation and accounted the bill with Rs. 100 cost + Rs. 2.47 and the balance Rs. 2.47 shall be paid by me to govt as per the rules of Service Tax.

Query - Kindly suggest me whether the TDS (194C) on this bill will be deducted on Rs. 104.94 or on Rs. 102.47.

Regards,

Lijo Philip

Guest

Guest (Expert)

01 March 2013 In this case ask the service provider (contractor) to raise the bill for Rs. 102.47/- because they dont need to charge the service tax portion in their bill for which they are not liable to pay. And TDS issue will be sorted out.

CA Mahavir Shah

CA Mahavir Shah (Expert)
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01 March 2013 First thing is that Bill is ALWAYS prepared with your own service tax burden.
Service Receiver's burden is to be written either as Note or other way is that you show 104.94 and then show deduction of Service Tax payable by service receiver, so your final bill would be ALWAYS Rs.102.47.

And TDS will be deducted on Rs.102.47 only.(i.e. Inclusive of Service Tax.)

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Querist : Anonymous

Querist : Anonymous (Querist)

03 March 2013 Thanks you sir for your guidance