Works contracts services

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CA Sanjay Baheti

PROPRIETOR

1160 Points Posted on 03 January 2014

one of my client being a Pvt Ltd Co.registered under Service tax for Works Contracts Services.The company providing the said services to another Pvt Ltd Co. Hence Partial RCM is not applicable to my client i.e. 100 Service Tax Liability is to be paid by my client.

Now My client has given a sub contract to another Sub contractor who is also registered under works Contracts Services with ST Dept as Individual.He is raising a Bill to us by using Partial RCM in that case 50 of ST liability is to be paid by my client as Service Receiver.

Now query is whether the aforesaid ST liability paid by my client being 50 as Service Receiver can be set off from my clients total ST liability 12.36 so far Service Provider original works Contract with another Pvt Ltd Co is concerned. That is how much amount is to be paid by my client as Service Provider as well as Service Receiver under Works Contracts Services are concerned.

Replies (2)

vishal sharma

Manager (Indirect Taxation)

68 Points Posted on 03 January 2014

YOU WILL TAKE THE CREDIT OF THE AMOUNT THAT YOU HAVE PAID I.E. 50 % PAID BY U ALONG WITH THE AMOUNT PAID BY THE SUB CONTRACTOR 50%

THIS CREDIT WILL BE UTILIZED BY YOU FOR DISCHARGING THE SERVICE TAX LIABILITY IF ANY BY YOU AND THE BALANCE WILL BE PAID BY YOU IN CASH

Neljo Davis ACA

Consultant

630 Points Posted on 03 January 2014

The company as a Service Receiver should pay in cash the 50% of the ST liability on the sub contracted amount and can claim input credit in the subsequent month. Challan is the basis for claiming credit.

The company as a Service Provider can claim input credit on the 50% of the ST liability based on the bill raised by subcontractor in the same month itself and required to pay only the balance of output tax liability.