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Service tax charge as per govt. rule

maharaj (accountant) (165 Points)

15 January 2015

I have one client who is doing contract for works with Govt. undertaking co. We have generally charge regular 12.36% ST on Bill now thay told us they already paid to the ST department 50% on ST. Bill already generated and ST return already been filed for Apr14 to sept'14.

As per my knowledge I have to amend ST regs. with works contract so that in our bill from now onwards we can charge 50% service tax.

My question which document should I collect from Govt. undertaking co. as they payment ST as per Govt. rule. So that in future at the time of ST return filing or any misconduct can't happened with ST department.

Please advice.

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MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 15 January 2015

In the case of PSUs they have to register under ST laws and have to collect 50% of the applicable tax while making payment to vendors. In your case,the abatement is 60% for original works and 40% for repair works.It means the PSUs have to collect 50% of ST applicable @ 12.36% on 40% of the bill value for original works and similarly on 60% of bill value for maintenance works while making payment to vendors. The contractor has to obtain a certificate from the PSU for the collection they have made and paid to the ST dept. Based on this certificate the contractor has to pay only the balance 50% of ST to the department.If any excess payment has been made and a return also has been filed wrongly amend/revise it within three months and carry forward to the next period. If it cannot be carried forward file a letter to the ST dept along with a manual return claiming a refund.......mjk