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Reverse charges service tax - please help.

Alok Bansod (Accounts executiv) (135 Points)

14 April 2014

Recently checking of accounts for closing of books of account for FY 13-14 in company where I am working. We skipped to pay service tax on reverse mechanism basis on security services from April 2013 till march 14. The vendor submits bill of Rs.11798 PM( Rs.10500 + Service tax Rs.1298) and on rs. 11798 we have deducted tax and paid to him. Now what amount we will have to pay tax, at what percent and interest from which date.please help how to account in books and calculate tax.

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11 Replies

JAINENDRA JAIN (ACS/CA) (1668 Points)
Replied 14 April 2014

you were supposed to pay 11682/- as 75% of your liabilty under RCM.

as per the notification no TDS should be deducted of service tax element provided tax amount si shown sepereately.

interest shall be hoger of -

a) 100/- per day of faliure

b) 1% p.m. of service tax starting from 1st day after due date till the date of payment

subject to 50% of service tax not paid.

regards,

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Vivek Khakhkhar (Assistant Audit Manager) (201 Points)
Replied 14 April 2014

Agreed with answer of Mr. Jainendara Jain. Also POT should be payment date. if payment not made within 6 months then invoice date is considered as POT.

basheer (TLT) (34 Points)
Replied 14 April 2014

Service provider collected from you entire part of service tax @ 12.36%, so now if you are going to pa ST it would be duplication

CA. abhinav kumar (job) (188 Points)
Replied 14 April 2014

As the service provider c collected the service tax on the whole amount of service. You don't pay the service tax again. In case of any query don't panic and just show them that service tax is already paid by the provider of service. And from this month onwards you pay only 10500 to the service provider and deposit the tax part directly.

mayank srivastava (articled assistant) (30 Points)
Replied 15 April 2014

Before doing all these things, first of all check whether service provider is a company. if it is so then you are not required to deduct and pay service tax else debit their a/c with 75% of service tax and deposit that into government a/c asap.

Regards,

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CA.Arun (M.COM,ACA,ACS,CMA) (Proprietor) (40 Points)
Replied 15 April 2014

Service provider has collected service tax fully 12.36%. So in the hand of service receiver service tax liability don't arise.

L K CHATURVEDI (Asstt Manager Accounts) (23 Points)
Replied 16 April 2014

Thanks

I agree with Arun and Avinav Kimar .Since the service provider have charged and paid service tax 12.36% IN FULL, YOU NEED NOT PAY AGAIN UNDER REVERSE MECHANISM. If you pay gain it will be duplication. . Please keep your record of full payment by service provider and submit to the department in case of need. But in future please pay only 25% of service tax amount to the service provider and pay 75% of service TAX AMOUNT AT YOUR END AND SUBMIT RETURN ACCORDINGLY.

CHATURVEDI

CA Yuvraj Tiwari (Chartered Accountant) (86 Points)
Replied 22 April 2014

Sir,

Is department have issued any clerification on the above matter. Please let me know.

anonymous (Accounts) (101 Points)
Replied 22 April 2014

as per service tax act service receiver will be liable to pay the service tax in case of reverse charge even if paid wholly by the service provider so you have to pay service tax as in case of reverse charge both service provider & receiver are independent from each other

CA Yuvraj Tiwari (Chartered Accountant) (86 Points)
Replied 22 April 2014

Any clerification issued by CBEC

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Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 28 April 2014

Dear Sir,

I study all of you view and explanation in this regard. We are present here an explanation in this regard i.e. RMC is applicable on Service provided @ 25% and rest 75% of service receiver i.e. if service provider is raised Rs. 100 p./m. then they made their invoice 100 add service Tax @ 3.09, total bill amount Rs. 103.09 then send invoice for you for payment.

Further you are deducted TDS amt. which is applicable rate then you to be deposited rest amount of Service tax is Rs. 100 @ 9.27% i.e. 9.27% and also deposit interest which is applicable @ rate of 18% p.a. also see the notification no. 30/2012 on cbec.gov.in

If you having other observation in this regard plz forward the same.