27 January 2014
You will have to pay 100% of Rs.49.40 to the service tax deptt under reverse charge. as the intention of the Service Provider is not to avail cenvat credit.
27 January 2014
Yes. You are not supposed to make this payment to Service Provider. Deposit Service Tax amount directly with the Service Tax Department.
27 January 2014
thanks Avtar ji but by deducting from service provider bill ? or we give to service provider whole rs 1049.4(ignore TDS) and another Rs.49.4 to ST deptt.?
27 January 2014
On the basis of the figures of the bill provided by you, pay Rs.49.40 to the Service tax department. Pay Rs.1000-10=990(after deducting TDS) to the service provider. Deposit TDS Rs.10 with TDS department. The service provider is claiming abatement of 60% and not claiming Cenvat that's why he has charged 40% of service tax.
Pl note in your example service provider should have charged as follow:
1000 + 74.16 i.e.ST @ 60% of of 12.36% of ST liability.
Since in your case its is charged @ 40% which is wrong.
When you receive invoice from SP you need to check whether RCM is applicable or not, if yes then check that only ST is charged by SP for his own liability i.e. 60% of 12.36%.
Now while making payment to service provider you have to make him full payment of ST & deduct TDS on Basic Invoice Value.
Over & above this you will be required to make payment @ 40% of 12.36% of your ST liability on Basic value directly to govt under RCM.
27 January 2014
As per Notification 26/2012 regarding abatement, the service tax @40% is to be charged in case of Renting of any motor vehicle designed to carry passengers if the CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 by the service provider. In my opinion, the service tax @40% has been rightly charged and the same is to be deposited with the service tax department by the service receiver. The net payment after deduction of service tax and TDS is to be made to service provider.
CAclubindia
