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Applicability of service tax under rcm

Krishna Srivastava (Professional Practice) (92 Points)

20 September 2013

Dear Sir,

We are recipient of services under a works contract. The service provider has no service tax registration and he has also not charged any tax in the bill. What is our liability towards service tax under RCM. whether we are responsible for our share of 50% in this case or for entire amount i.e. @ 12.36%. Please advise.

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9 Replies

CA girl (Article Trainee-CA Final) (1942 Points)
Replied 20 September 2013

Hello, Even if your service provider has not charged service tax or has not obtained ST registration still you will be liable to pay only your share of service tax to the gov. Further, the rate is not 50% of 12.36%. There are various rates prescribed for different types of works contracts, you should clarify under which category your works contract falls under and decide accordingly.

Normally for the Category Original Works/New Works the rate would be- 4.944%(12.36% * 40%) of which you should pay half,Ie;2.472%.

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Arun Kumar Singh (GST Advocate) (15203 Points)
Replied 20 September 2013

Provided or agreed to be provided by service portion in execution of works contract by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory.

Amol Rathi (STUDENT) (28 Points)
Replied 20 September 2013

Under RCM, liability of service provider and recipient is independent of each other.. You have to pay your share of liability while going through valuation rules

Ganeshbabu K (Audit and Tax Advisory) (48564 Points)
Replied 20 September 2013

You should discharge ur part of liability ...under rcm ..service provider can take small service provider exemption but you cannot avoid service tax with ths reason..ur liability is independent

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Vishal (Student) (154 Points)
Replied 21 September 2013

You just need to pay your part of service tax.

service tax software

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Ravi Nallipogu (Student ) (128 Points)
Replied 21 September 2013

I agree with Divya Bharathi

you are not provided sufficient information about receiver and provider

If Service provider is Company RCM not applicable and If others RCM is applicable the below enclosed rates

you should liable to discharge your portion of ST

Valuation of works contract Notification No 24/2012-ST dated 6th june ,2012

Movable property :

Execution of Original work is 40%

Maintenance or Repair is 70%

Immovable Property :

other than above work is 60%

MANJEET SINGH (DY.MANAGER ACCOUNTS) (26 Points)
Replied 23 September 2013

Dear Sir,

We are receipient of services of Civil Contractor (Prop.)through different works contracts entered into at different dates for repair,renovation and even new construction also which does not include cost of land but only material and cost of labour provided by him but the contractor does not have registered and neither charging any service tax in the bills. In bills he raised on us includes the composite rates of labour which does not specify the cost of materials.

In this case what is our liability in case of reverse charge mechanisim.

Although till date we are depositing the service tax as 50% of total value of bill he raised.

Please clarify.