anilwyd (77 Points)
23 July 2012Hello,
Whether Point of Taxation Rules will be applicable for Service Receiver in under Reverse charge.
Case:
We are getting Works Contract done by Contractor.
We are paying advance to the contractor.
Whether we have to charge Service Tax on such advaces?
What is the status of service receiver?
How he will treat the same?
Whether we(Service Receiver) need to ensure his(Service Provider) compliance?
Please clarify.
Rohan
(Consultant)
(91 Points)
Replied 23 July 2012
POT for the service receiver is the date on which payment is made to the service providers. However, the proviso to rule 7 provides that in cases where such payment is not made within a period or six month of the date of invoice, the point of taxation shall be determined as if this rule 7 didn't exist.
For the later part, the liability shall fall on the service provider from the date of issuance of invoice. So service provider shall need to ensure that he gets the payment within Six Months.
Prateek Agarwal
(Sr. Executive - Finance & Accounts)
(1732 Points)
Replied 23 July 2012
The status of the service receiver is a body corporate.
As correctly pointed out by Rohan, the PoT shall be the date of payment subject to the condition that the actual payment is received within 6 months from the date of invoice.
You as a service receiver needs to pay-off your part to the Govt i.e. 2.472%.
The service provider shall be held responsible if he doesnt discharge his liability
anilwyd
(77 Points)
Replied 23 July 2012
Thanks,
Few more clarifcations,--
We are paying the contractor, BEFORE issue of Invoice by HIM.( As ADVANCE)
What is the treament ? We (Service Receiver- a Public Ltd Co) need to account and Pay ST on basing of advance??
How the 2.472% is arrived?
as receiver, we are liable for 50% of amount, right?
so if Rs 100 is paid as advance,
Shall we pay 100*50%*12.36%= 6.18?
Please clarify.
Rohan
(Consultant)
(91 Points)
Replied 23 July 2012
If Rs. 100 is paid as advance, then 4.94 shall be the total applicable service tax.
And you being the service Receiver, you shall pay 50% of 4.94 that's 2.472 service tax.
And 102.472, shall be given to the contractor being 100/- as contract advance and 2.472 as service on their part.
anilwyd
(77 Points)
Replied 23 July 2012
How I can pay Rs 102.472 ?
2.472 I have to pay to Govt right?
How you calculated 4.94?
When we pay advance to contractor- whether he has to pay ST ?? before generating Invoice..
thanks
Prateek Agarwal
(Sr. Executive - Finance & Accounts)
(1732 Points)
Replied 23 July 2012
You have to discharge your liability of ST. As per composition scheme, on works contract the rate of ST is 4.944% i.e 4.8% ST+2% EC+ 1% SHEC.
Half of it you have to pay.
The Govt is not yet clear whether you have to pay the same in its kitty directly. You can also pay the same to the Contractor, who along with the his liability will pay to the Govt.
CAclubindia
