Applicability of service tax under rcm

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%.  

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.

You just need to pay your part of service tax.

service tax software

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.

Example for your problem.

Total Bill amount- Rs. 100

Abated value of service- Rs.40 ( I have assumed 40% category is applicable in your case)

Service Tax portion payable to service Provider-Rs. 2.472

Service Tax portion payable under RCM -Rs. 2.472 ( This amount you are to paid under RCM)

Dear Ravi, 40% is also applicable in case of immovable properties.