Amit Prakash Singh (Accountant) (295 Points)
14 August 2012Dear All Expert,
Please guide what is Reverse Mechanism of Service tax in simple form. and pls expain case in that sitution below:
1) My company transfer material to company branch in different state through by road transport .
2) Any car and taxi hire for going one place (not always) to other plce within delhi.
Thanks and Regards,
Amit Singh
CA Saiyum khan
(Practicing CA)
(685 Points)
Replied 14 August 2012
Reverse charge mechanism is tha when the service provider is unorganised sector i.e partnership firm, individual, HUF etc then service tax has to be paid by the recepient provided the service recepient is body corporate.
1. Being body corporate the service tax has to be paid by you for the transportation throug GTA.
2. As it is occassional and not forming the contract no service tax is attracted. But if the contract has been executed even verbal then reverse charge mechanism would be applicable.
CA Saiyum khan
(Practicing CA)
(685 Points)
Replied 14 August 2012
Reverse charge mechanism is tha when the service provider is unorganised sector i.e partnership firm, individual, HUF etc then service tax has to be paid by the recepient provided the service recepient is body corporate.
1. Being body corporate the service tax has to be paid by you for the transportation throug GTA.
2. As it is occassional and not forming the contract no service tax is attracted. But if the contract has been executed even verbal then reverse charge mechanism would be applicable.
Amit Prakash Singh
(Accountant)
(295 Points)
Replied 14 August 2012
Dear Sir
1) We already paying Service tax on behalf on transporter .Is if any freight paid by our company branch then can we also paid service tax on it.
2) we have also security gaurd provided by a security agency then what the role of Rverse mechanism of service tax in it.
pls rply
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 14 August 2012
In case of GTA only one of the party need to pay, which means if the service provider is registered and collecting tax then you need not pay, but if service provider doesnot collect then its on companies head to pay tax, in that case, if branch pays then HO neednot pay.
I case of Security guard, the liability of service tax is on head "supply of manppower" and being so, its partial reverse charge basis of service tax, where 75% of service tax is on recieving company and 25% of it is still the liability of service provider.
Amit Prakash Singh
(Accountant)
(295 Points)
Replied 14 August 2012
Dear sir,
will u give one example by giving any value ( security bill) and how we show it in return st3 which we deducted as reverse service tax mechanism.
thanks
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 14 August 2012
Example of security bill is like this
Say for august your security bill is 100 Rs. and the other guy might have charged you Rs. 3.09 and therefore the total bill will be Rs. 103.09Rs (bill from security company)
Now the pending 9.27 Rs Bill(Totalling to 12.36Rs or 12.36%) will be your(company's ) responsibility.
Now showing in Returns in concerned even i am not sure, but in returns you always have 2 options in return to show payable of ST on particular service, so in the case of manpower supply you can show your liability on "liability of reciever" section of the returns.
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 14 August 2012
With the negative mega list up, i expect a change in format of st-3 returns, but as of now, i dont think there is any change.. lets wait and see
Mallikharjun
(Deputy Manager)
(304 Points)
Replied 16 August 2012
Generally service tax is to be paid by the service provider. But in case of RCM, service tax is to be paid by service receiver. Examples for this are GTA, Non resident payments etc. Recently Govt added some more services under this RCM. RCM is of two types i.e., Complete reverse charge and partial reverse charge.
Complete reverse charge means 100% of service tax is to be paid by service receiver. Partial reverse charge means some portion of service tax is paid by service receiver and some is to be paid by provider. Notification 30/2012 ST clearly states the % of service tax to be paid by service receiver and provider.
Amit Prakash Singh
(Accountant)
(295 Points)
Replied 16 August 2012
Dear sir
What will be effect of Service tax reverse Mechanism In our case :-
1) In case of GTA :- we paying service tax all freight of Good Transport By Road .
2)In case of Security Gaurd :- Security provider agency paying all Service tax which bill they arise i just pay full amount of bill.
3) Hire taxi or car :- We hire taxi and car occasionally not forming any contract.
pls advice
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 16 August 2012
Assuming yours is a company not a propreiotry , firm or HUF
1. GTA the whole 12.36%(after taking 75% abatement on bill amount) is your responsibility.(applicable even to partnership firm)
2. Security expense: 12.36% on 75% of bill amount(excluding service tax if they have charged any) is company's
3. Hiring of cab,
(a) if cab taking abatement of 60% then whole service tax on abated amount is company's responsiblity
(b) If cab is not taking abatement then 40% of service tax liability is your company's liability
Amit Prakash Singh
(Accountant)
(295 Points)
Replied 16 August 2012
Dear Sir
In our case of Hire taxi or car is ocassional not always then reverse tax mechanism arise in that situation .Taxi and Car hiring from individual (not registered) not from company.
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 16 August 2012
In case of security and hire charges
The partial reverse charge applies only in case where provider is indiviual/HUF/firm and reciever is company
Being so I believe you are liable to service tax, here agreement or contract for service is not nexessary, as long as service is provided or agreed to be , liability has arised and has to be discharged.( again if bill for hiring the taxi is in name of employee and you are just reimbursing the amount paid by employee then in my opinion service tax is not applicable)
RENGARAJ R.K
(ADVOCATE)
(7557 Points)
Replied 17 August 2012
Call taxi and meter taxi is excluded. Only cab is included for reverse charge. If the cab owner is not registered under service tax, means he would not have availed any abatement and hence as a service receiver you have to pay 40% of the bill amount under reverse charge.
llllVICTORllll
(Internal Auditor)
(511 Points)
Replied 17 August 2012
Rangaraj Sir, can you guide me to notification excluding Call taxi and Meter Taxi? i was of assumption that even that is included when the notification said "service provided or agreed to be provided by the way of hiring or renting any motor vehicle designed to carry passengers."
IT would very very helpful if you can reproduce or guide me to the notification.
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