Dear Friends
I would like to get an answer for my following query in Service Tax payable by the receiver under reverse charge mechanism.
a is a corporate Ltd Company registered under service tax rules.
b is a service provider under GTA
Now A received the service from B for sum of RS 10,000.00 towards Lorroy Freight payable by A. A while making the payment of freight to B deduct service tax under reverse charge at 12.36% on 25% of the freight payble and paythe balance freight payable. The service provider accepts the freight after deducting the Service Tax. A promptly pays the service tax amount deducted from the provider on the due date.
can any body inform whether this transaction is correct and is there any rule in Income Tax act that the receive shoudl not deduct the ST from the provider and it has to be paid as TAX. The answer is required very urgently.
Thanks and Regards
( Jayam Ramesh K C)
Accounts Manager heading the Indirect taxation.
CAclubindia
