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Service tax on general repairs

Gunasekar (Executive) (26 Points)

03 February 2016

Q1. As a service receiver(Company), is general repair comes Under the Reverse charge mechanism.

Q2. We have signed the Annual Maintenance contract with vendors and paid the service tax as a service receiver on invoice value. After the month, few repairs were done by the vendor and billed for the actual material cost. Please clarify, such bills/payments required to pay the service tax ? is this applicable for service tax reverse charge mechanism.

Thanks

Gunasekar

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2 Replies

Uday Kumar (Experiencing the IDT) (34 Points)
Replied 03 February 2016

Hi Gunasekar,

General Repairs, (which doesn't involve any material) will not be covered under Reverse Charge Mechanism (RCM).

In case, where there is involvment of material along with the provision of service, then it becomes works contract service.

Only if the service provider is any one of the following catagories -

Individual
Partnership Firm
Hindu Undivided Family (HUF)
Association of Persons (AOP)

and service receiver is the business entity registered as body corporate, then only reverse charge attracts on such work contract services.

Further, when reverse charge attracts, Rule 7 of Point of Taxation Rules, 2011 will be applicable.

point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act, shall be the date on which payment is made:

Provided that where the payment is not made within a period of three months of the date of invoice, the point of taxation shall be the date immediately following the said period of three months

In your case, as service tax is paid on invoice value. Then, not required to pay service tax once again on the material value.