Service tax to be paid by recipient of service at abatedrate

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2013 Our company has received the works contract bill containing charges for labour and material supplied. The rate of service tax taken by the service provider is 7.42 and it has been mentioned that 50% of the service tax to be paid by service recipient. Now, are we liable to pay service tax @ 3.71% of service tax or 50% of 12.36% ie at 6.18% of total invoice amount as we are taking full input credit of the service tax paid by us on utility bills and other bank charges?

CA Vikas Acharya

CA Vikas Acharya (Expert)
Follow

20 May 2013 tax liability:
suppose bill of rs 100 then total service tax ont this transaction of work contract is 7.42% payable to govt. i.e, Rs 7.42.

Now payment:
out of this 7.42, u will pay 50% of 7.42 to the service provider. i.e, Rs 3.71 to him and he will deposit the same to govt.
another 3.71 will be deposited by you directly to the govt.
govt will finally receive 7.42, out of which 3.71 from you and 3.71 form service provider.

Now CCRi.e, credit:
3.71 paid by you to service provider will be allowed to you on the basis of invoice.
and 3.71 paid by you directly on the basis of challan of payment.

hence, total paid to govt. 7.42 and total credit allowed 7.42.

any other practice by you or service provider is wrong.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now