Kaushal (Article) (66 Points)
16 January 2013If X company is service receiver of a works contract service provided by Y, who is an individual, the X co will be liable to pay service tax on 50% of the service under provision of reverse charge while Y will be liable for 50%. But,in what way the provision will apply and liability of both will be affected if Y has opted for abatement? Please elaborate. Thanx in advance.
satya
(Executive Excise)
(1839 Points)
Replied 17 January 2013
Sonu Kumar
(Account Manager)
(665 Points)
Replied 17 January 2013
if Mr. Y do not reach on minimum exeption limit i.e. Rs 10 Lakh then he is not liable to pay service tax, but in case of Company X, Company will be liable to pay 75% of Service tax under Reverse Charge Machenism.... Under Reverse Charge no Abatment is Available.
Sanjeev Parasrampuria
(B.Com CA Final CS Final)
(273 Points)
Replied 17 January 2013
If Service Provider levy 12.36% service tax in Invoice then whether Service Receipent is also layble for booking of Service Tax Payable in favour of govt. under reverse charge mechenism.
PARMITA MAZUMDER
(CA- Practice)
(386 Points)
Replied 17 January 2013
In works contract service 50% of service tax will be payable by service receiver and 50% by the service provider if the following conditions are satisfied:
Two options are there:-
Pay service tax on Value of services after deducting value of goods from the gross value.
If the amount is say 1000 rupees (Original Work)
Liability on service receiver :- 1000*40%*12.36%*50%
Liability on service provider :- 1000*40%*12.36%*50%
(Is imp to note that service provider and receiver can have independent valuation)
Sanjeev Parasrampuria
(B.Com CA Final CS Final)
(273 Points)
Replied 17 January 2013
Dear Parmita,
My query still unsolved, If whole liability booked by service provider then whether recepeiant is also layble for paying service tax to govt. for his part i.e.50%
satya
(Executive Excise)
(1839 Points)
Replied 17 January 2013
Sanjeev Parasrampuria
(B.Com CA Final CS Final)
(273 Points)
Replied 17 January 2013
Dear Sathya,
This mean govt. impose double tax on people by way of service tax beacuse in initial stage of reverse charge mechenism every person not aware from this.
PARMITA MAZUMDER
(CA- Practice)
(386 Points)
Replied 17 January 2013
The service recipient will be stil liable to discharge its liability, and if he has paid 100% to the service provider he can ajdust the same in next bill or through notes.
Swayam
(Audit Executive)
(35 Points)
Replied 17 January 2013
Kaushal
(Article)
(66 Points)
Replied 17 January 2013
Please attend the below question also after attaining the above one.
A Co. has provided a works contract service in year 2010-11 of Rs 100,000, and booked the service in the said year; and now receives the payment for the said service in 2012-13. It has not collected service tax in 2010-11, but is now paying service tax 12360 on 100,000 in 2012-13. Is this treatment correct?
Live class on PF & ESI Enrollment & Returns Filing(with recording)
CAclubindia
