WE ARE PVT LTD CO, & SERVICE RECEIVER, I WANT TO DEPOSIT SERVICE TAX ON MAINTAINANCE OF MACHINES LABOUR CHARGES. PLEASE TELL ME THE RATE OF S. TAX WITH ABATEMENT
IF individual is not charging then he might be availing the exemption limit of Rs. 10 Lakhs which is provided to a Samll Service provider.
Your case is covered Work Contract.
The Labour Charges paid is do covered in Work Contract as per which the Value of service is 70% of gross amount charges in your case. Moreover, the reverse charge mechanism provides that the srevice tax liability is needed to be paid both by service receiver and provided. Both will pay 50-50%. So, even if he is availing the exemption limit their is no such limit for you. YOU NEED TO PAY SERVICE TAX. Let me explain with an example:- If the Gross amount of Service provided is Rs. 120 including vat of Rs. 20/-. Service tax shall be charged on (Rs. 120-20)X 70% = Rs. 70/- Service tax = 70 X 12.36% = 8.652 Service tax liability on Service provider = 8.652 X 50% = 4.362 (Since he is exempted from Service tax. So, he need not to pay anything)
Service tax liability to be discharged by you = 8.652 X 50% = 4.362/-
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