Notification & sl no. for works contract service for receive

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Ajinkya (Querist)
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22 April 2016 Hi,
We are the service Receiver for works contract service under which 40% Paid by Receiver % 60% Paid by Provider & in 40% of Receiver 50% is Payable & 50% is abatement then What is the Notification & Sl No. for Abatement & for Reverse Charge Mechanism & how to show it in Service Tax Return

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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24 April 2016 The service recipient receives two services Rent-a-Cab Operator Services and Works Contract Services. Therefore in the ST - 3 Return there will be two Payable Service Sheets.

In the Rent-a-Cab Service sheet the exemption notification would be 30/2012 sl no 7(a) and the abatement notification would be 26/2012 sl no 9.

In the Works Contract sheet both the notifications would be 30/2012 sl no.9

Ajinkya

Ajinkya (Querist)
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26 April 2016 Thanx SIr But In Case of Reverse charge Mechanism how to Show the amount on Which Receiver has to pay Service Tax for E.g. My Company Receives services of works contract on which 60% Abatement & on Remaining 40% Half Service Tax has to pay by receiver & another half by provider then in that case how to show that amount in ST-3 Because of this reason my ST-3 Rejected by 2 times

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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03 August 2024 To correctly account for Works Contract Services (WCS) under the reverse charge mechanism and abatement in your ST-3 return, follow these guidelines:

### **1. Notifications and Serial Numbers:**

**Abatement Notification for Works Contract Services:**

- **Notification No. 30/2012-Service Tax**, dated 20th June 2012, provides for abatement in respect of works contract services.
- **Serial Number for Abatement:** 12. This notification provides an abatement of 60% on the value of works contract service, meaning that only 40% of the value is taxable.

**Reverse Charge Mechanism Notification for Works Contract Services:**

- **Notification No. 30/2012-Service Tax**, dated 20th June 2012, also addresses the reverse charge mechanism for works contract services.
- **Serial Number for Reverse Charge:** 7. This specifies that the service receiver is required to pay service tax on a portion of the service value under the reverse charge mechanism.

### **2. Calculation and Showing in ST-3:**

**Example Scenario:**

- **Total Value of Works Contract Service:** ₹1,00,000
- **Abatement (60%):** ₹60,000
- **Taxable Value After Abatement (40%):** ₹40,000
- **Service Tax Rate:** 12% (assuming this is the rate applicable)
- **Total Service Tax Payable (on ₹40,000):** ₹4,800
- **Reverse Charge Split:** 50% by the service receiver and 50% by the service provider.

- **Receiver’s Share of Service Tax:** ₹2,400
- **Provider’s Share of Service Tax:** ₹2,400

**Entries for ST-3 Return:**

1. **Part A - ST-3 Return:**
- **Gross Amount (Including Abatement):** ₹1,00,000
- **Value of Exempt Service:** ₹60,000 (show as exempted under abatement)
- **Taxable Value:** ₹40,000 (40% of the total service value, after abatement)
- **Service Tax on Taxable Value:** ₹4,800

2. **Part B - ST-3 Return:**
- **Reverse Charge Mechanism Section:**
- **Amount on which Service Tax is Payable by Service Receiver:** ₹40,000
- **Service Tax Payable by Service Receiver:** ₹2,400
- **Service Tax Payable by Service Provider:** ₹2,400

Ensure that you show the **service tax payable by the service receiver** under the reverse charge mechanism correctly. You need to report the total service tax liability of ₹4,800, split accordingly between the provider and the receiver.

**Details in ST-3 Return:**

- **Service Tax Paid by Receiver:** Mention the amount you paid under the reverse charge mechanism in the relevant section of the ST-3 return.
- **Service Tax Paid by Provider:** Ensure this amount is correctly accounted for in the provider’s records.

### **Summary of Key Points:**

1. **Notification and Serial Number:**
- **Notification No. 30/2012-Service Tax** - Serial Number 12 for abatement and Serial Number 7 for reverse charge mechanism.

2. **ST-3 Filing:**
- Show the abatement value under the exempt service section.
- Report the taxable value and service tax payable accurately.
- Split the service tax amount as per the reverse charge mechanism.

By following these guidelines and ensuring accurate reporting in your ST-3 return, you should be able to resolve the issues causing rejection and comply with the applicable service tax regulations.