In contract Bill, Service Provider Raising Invoice with 100% Service tax on 40% of Bill Value. in that case, as a service receiver what we need to do. whether we need to pay full amount of invoice value to vendor or 50% of service tax deduct from bill and pay to govt.
24 May 2016
Dear Sargunan, Reverse Charge mechanism in case of Works Contract is attracted when the Provider of Service is: 1.Proprietory firm 2.Individual 3.HUF 4.Partnership Firm 5.AOP and the receiver of the service is: 1. Any company registered under companies act 2. business entity registered under body corporate.
In case of above situation RCM gets attracted. If it fits into above criteria you need to pay 50% of the Service tax amount to the govt and the balance 50% of the service tax amount you need to pay to the contractor who will forward the same to the govt.
To summarise, 50% of the service tax amount needs to be deducted by you and is to be paid to the government.
24 May 2016
Dear Sargunan, As per Service Tax Laws, the liability is to be discharged on whom the liability is raised. If the provider of service has paid the full tax amount then he needs to claim refund of such amount for which you were liable to pay service tax to the govt. And you need to discharge your liability. Pl note that you are not discharged from liability if it is paid by service provider. Thanking You.
CAclubindia
