18 February 2016
Hello, We are Pvt. Ltd. company received a service as works contract . So my query is weather we pay the whole amount of service tax or pay 50% of service amount received by us.When we pay the service tax amount? The Invoice date is 10.10.2015 but we have received the Invoice on 17.02.2016, although we have paid Rs.20000.00 as advance to Service provider.
I am waiting a valid reply.
Note: Invoice .....
Supply of Electrical Material........................................Rs.33000.00 Repair & Maintenance (Labour Charge).....................Rs.5000.00 Testing Of above Elec. Material(Labour Charge)........Rs.19000.00 Vat@5% (supply of material).......................................Rs.1650.00 Service Tax for Labour Charges@14.5%....................Rs.3480.00 ........................ Grand Total Rs.62130.00
18 February 2016
On payment of an advance no liability for payment of reverse charge arises in the hands of the recipient. Under Works contract Service, the service recipient has the option of computing the liability irrespective f the method opted by the service provider.
The opinion below is given on the following assumptions : (a) The Contractor is not a body corporate. (b) He has proper VAT / STC Registration. (c) The Contract is not for original work i.e it is not for a new construction or installation. (d) He has issued a consolidated invoice with the relevant details.
On labour charges too Reverse Charge is applicable since it is tantamount to Supply of Manpower Services. The RCM payable is 100%. Therefore the Service Tax in the bill is not payable to the contractor.
No service tax is payable on Government Duties collected. Hence VAT of Ts.1,650/- too is not subject to Service Tax.
On Works Contract an abatement of 30% is available. Therefore an abatement of Rs.17,100/- is available leaving a taxable service of Rs.39,900/-. Reverse Charge is payable on 50% of the taxable service by the service recipient. So you are responsible to pay service tax on rs.19,950/- @ 14% plus SBC of 0.5%. Rs. 2,893/- is payable by you as Service Tax / SBC on account or Reverse Charge.
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