Service tax under reverse charge

Mam,

You are eligible for pay service tax on Rs. 52000.00 only.

Thank you. But can you elaborate further. Why service tax is applicable on 50000 i.e, purchase items....Please clarify from the view point of service recipient. 

Thanks in advance

If sale tax/vat has been paid then no need to pay service tax. Service tax will be payable on only insallation charges. 

Thank you sir. so you mean to say, as service recepient we need to pay @ 4.326% on 2000/- i.e., Rs. 729 directly to the government. Also tell can we take input credit of the same. we are company providing ad services. Please clarify...

What if in the above bill, vat/ sales tax is not charged, do we need to pay service tax on entire bill of Rs. 52000 @ 4.326% i.e., 2,250. in the earlier query service tax on 2000/- comes to 87/-

Thanks in advance

If in the invoice, material & labour charges are shown seperately then ST to be charged on labour(installation charges in this case) only. Reverse charge is appplicable only when service provider is individual/firm/HUF/AOP & service receiver is body corporate/company.  
 

Originally posted by : Guddi
	Thank you sir. so you mean to say, as service recepient we need to pay @ 4.326% on 2000/- i.e., Rs. 729 directly to the government. Also tell can we take input credit of the same. we are company providing ad services. Please clarify...

If the service receiver is a company, then 50% of the ST liability (2000*12.36%*50%=Rs. 124) to be paid by the company & balance 50% by the firm(service provider).

Originally posted by : Guddi
	What if in the above bill, vat/ sales tax is not charged, do we need to pay service tax on entire bill of Rs. 52000 @ 4.326% i.e., 2,250. in the earlier query service tax on 2000/- comes to 87/- Thanks in advance

Irrespective of the fact that vat/sales tax has been charged or not, if invoice amount has been bifurcated into material & service seperately then ST to be charged on service charge only.

Service tax has to be paid under reverse charge. The rate of service tax shall be 12.36*2000*50% as per partial reverse charge notification.

Yes you can avail the input tax credit as per CCR rules 2004.

But service tax is payable only on 70% value of service portion(i.e., installation of electrical fittings of immovable property. In that case, service tax payable as a service recepient is 2000*0.7*0.1236*50% = 87/-

What if invoice does not bifurcate material and service portion. Ex: Electrical items with installation = Rs. 52000. Is service tax payable on entire 52000 on 70% value. ie., 52000*0.7*0.1236*50% = 2250/-

reverse charge is applicable for Works contract. In this case, it is pure labour. so ST is 12.36% and to be discharged by SP only

would demarcation of differnt values of service and goods make a change in the nature of the contract 

Originally posted by : Akshay Garg
	would demarcation of differnt values of service and goods make a change in the nature of the contract

As per Clause 54 of Section 65B of the Finance Act, Works Contract means a contract wherein transfer of property in goods involved (in the execution of such contract) is leviable to tax as sale of goods & such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property.

So, demarcation of different values of goods & service wont change the nature of contract.