08 August 2012
My client is Service Provider of Works Contract Service & Manpower Supply. He is Proprietor.
W.e.f. 01/07/2012 Reverse Charge mechanism is applicable. In case of Works Contract Service 50% tax required to be paid by Service Provider & 50% required to be paid by Service Receiver. In case of Manpower Supply 25% tax required to be paid by Service Provider & 75% tax required to be paid by Service Receiver.
My query is
What will happen if my client charge 100% tax in bill & paid to the Government ?
In short whether it is mandatory or optional (% of Tax Liability of Service Provider & Receiver)
And if mandatory then how we can show in our bill of Service Tax Amount.
08 August 2012
If 100% is charged in invoice, then reverse charge mechanism is to be dropped. In return you need to show this under regular column. No need to depict it under reverse charge column.
19 August 2012
In my opinion, as per the understanding, the service receiver has the accountability and liable to pay for the reverse charge even if the SP has wrongly charged 100%, especially the SR is a company. The purpose of bringing few (10) services under reverse charge is to fix the liability to the SR as the Government feels SP is not remitting properly the tax collected by them.
CAclubindia
