parking contractor
This query is : Resolved
03 June 2009
hello friends,
we are parking contractors in mumbai,
we collects parking charges on behalf of mall management and pay them lumpsum charges as in some cases rent or mangement fees or some times sharing of the collection , my query is is this structur liable to pay service tax some where as the the money collected is not inclusive of service tax.... please guide me....
we are parking contractors in mumbai,
we collects parking charges on behalf of mall management and pay them lumpsum charges as in some cases rent or mangement fees or some times sharing of the collection , my query is is this structur liable to pay service tax some where as the the money collected is not inclusive of service tax.... please guide me....
03 June 2009
Collection of Parking charges on behalf of the mall is appears to be classifiable under the category of Business Support Services and attracts Service Tax. However, if the total consideration received in any financial year do not exceed Rs.10 Lakhs, there is no need to collect and pay the Service TAx in asmuch as there is an exemption up to Rs. 10 Lakhs.
03 June 2009
thanks for the reply but our ssue was there is mall X and Contarctor y.. now X enters in to contract with Y saying Y will manage the parking and collect the revenue generated and will pay X a ABC amount as management fees now when X gives me a debit note with abc amount of mangement fees and over that service tax on that abc amount, now y colect the parking charges and employ few attendents in the mall to collect the same which attarcts a monthly salary expense and over heads... and management fees is also an expense now Y has a income from the collection and in which service tax is not collected so my question was if i am not collecting service tax from customers and managing the parking would Y have to pay service tax or not
09 August 2024
In the scenario you've described, the parking contractor (Y) is managing parking operations and collecting revenue on behalf of a mall (X). To determine the service tax implications, it's crucial to understand the nature of the services provided and the applicable tax laws. Here's a detailed breakdown:
### **Service Tax Liability for Parking Management:**
1. **Nature of Service Provided:**
- **Parking Management Services:** The contractor (Y) is providing parking management services, which typically include managing the parking area, collecting parking fees, and possibly employing staff for this purpose.
2. **Taxable Service Classification:**
- **Service Tax Applicability:** Under Indian law, specifically the Service Tax Act (now replaced by GST), parking management services are considered a taxable service. Therefore, if you are providing parking management services, you are required to charge service tax/GST on these services.
3. **Service Tax/GST Collection and Payment:**
- **Collection of Service Tax/GST:** As a service provider (Y), you are responsible for collecting service tax/GST from customers if the service falls under taxable categories. Even if you do not directly collect service tax from the customers, you are required to pay service tax/GST on the taxable service you provide to the mall (X).
- **Management Fees:** The management fees paid by the mall (X) to the contractor (Y) are subject to service tax/GST. The mall's (X) invoice or debit note for management fees should include service tax/GST.
4. **Responsibility of Service Provider (Y):**
- **Service Tax on Management Fees:** If mall (X) issues a debit note with management fees plus service tax, the contractor (Y) must pay the service tax on these management fees to the authorities. This service tax is typically passed on to the mall (X) as per the contract.
- **No Service Tax on Customer Fees:** If you are not collecting service tax from customers for parking fees, you are still responsible for paying service tax/GST on your service fees to the mall (X).
5. **Input Tax Credit (ITC):**
- **Claim ITC:** As a contractor, you may be eligible to claim input tax credit on the service tax/GST paid on inputs, such as salaries and overheads, used to provide parking management services.
### **Action Steps for Contractor (Y):**
1. **Verify Tax Liabilities:** Ensure you understand your service tax/GST obligations and confirm the classification of services with a tax consultant or accountant.
2. **Invoice Management Fees Correctly:**
- Ensure that when issuing invoices to the mall (X) for management fees, you include service tax/GST as applicable.
3. **File Returns and Pay Taxes:**
- File your service tax/GST returns accurately and pay the taxes collected as well as any service tax/GST due on management fees.
4. **Consult with a Tax Professional:**
- Given the complexities involved, consulting a tax professional or accountant can provide tailored guidance and ensure compliance with current tax laws.
### **Summary:**
- **Service Tax/GST on Services:** You need to pay service tax/GST on the management fees received from the mall (X) and ensure it is included in your invoice.
- **No Direct Tax on Customer Fees:** If you do not charge service tax/GST on parking fees collected from customers, you are still liable to pay service tax/GST on the management fees you receive.
- **Consultation:** Seek professional advice to ensure compliance and to manage any complexities related to tax liabilities and credits.
By adhering to these guidelines, you can ensure that you meet your tax obligations and manage your finances effectively.
### **Service Tax Liability for Parking Management:**
1. **Nature of Service Provided:**
- **Parking Management Services:** The contractor (Y) is providing parking management services, which typically include managing the parking area, collecting parking fees, and possibly employing staff for this purpose.
2. **Taxable Service Classification:**
- **Service Tax Applicability:** Under Indian law, specifically the Service Tax Act (now replaced by GST), parking management services are considered a taxable service. Therefore, if you are providing parking management services, you are required to charge service tax/GST on these services.
3. **Service Tax/GST Collection and Payment:**
- **Collection of Service Tax/GST:** As a service provider (Y), you are responsible for collecting service tax/GST from customers if the service falls under taxable categories. Even if you do not directly collect service tax from the customers, you are required to pay service tax/GST on the taxable service you provide to the mall (X).
- **Management Fees:** The management fees paid by the mall (X) to the contractor (Y) are subject to service tax/GST. The mall's (X) invoice or debit note for management fees should include service tax/GST.
4. **Responsibility of Service Provider (Y):**
- **Service Tax on Management Fees:** If mall (X) issues a debit note with management fees plus service tax, the contractor (Y) must pay the service tax on these management fees to the authorities. This service tax is typically passed on to the mall (X) as per the contract.
- **No Service Tax on Customer Fees:** If you are not collecting service tax from customers for parking fees, you are still responsible for paying service tax/GST on your service fees to the mall (X).
5. **Input Tax Credit (ITC):**
- **Claim ITC:** As a contractor, you may be eligible to claim input tax credit on the service tax/GST paid on inputs, such as salaries and overheads, used to provide parking management services.
### **Action Steps for Contractor (Y):**
1. **Verify Tax Liabilities:** Ensure you understand your service tax/GST obligations and confirm the classification of services with a tax consultant or accountant.
2. **Invoice Management Fees Correctly:**
- Ensure that when issuing invoices to the mall (X) for management fees, you include service tax/GST as applicable.
3. **File Returns and Pay Taxes:**
- File your service tax/GST returns accurately and pay the taxes collected as well as any service tax/GST due on management fees.
4. **Consult with a Tax Professional:**
- Given the complexities involved, consulting a tax professional or accountant can provide tailored guidance and ensure compliance with current tax laws.
### **Summary:**
- **Service Tax/GST on Services:** You need to pay service tax/GST on the management fees received from the mall (X) and ensure it is included in your invoice.
- **No Direct Tax on Customer Fees:** If you do not charge service tax/GST on parking fees collected from customers, you are still liable to pay service tax/GST on the management fees you receive.
- **Consultation:** Seek professional advice to ensure compliance and to manage any complexities related to tax liabilities and credits.
By adhering to these guidelines, you can ensure that you meet your tax obligations and manage your finances effectively.
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