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Service receiver to pay tax from 1 july 12

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

09 July 2012

Friends

From 1st July 12, service receivers receiving manpower service from service providers are liable to pay output service. My question is : A company used to receive service from 2 providers during last 2 years. One of them used to charge service tax and other did not probably due to fact that its turnover is less than 10 L.

Now under present regime, is the receiver of service liable to pay tax on both cases.

Please guide.

Regards,

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14 Replies

CA sawan kumar (senior associate) (154 Points)
Replied 09 July 2012

The liability of Service Provider and Service Recepient are kept separate. Even if the service provider is not liable to pay service tax because of some reasons, it doesnt relieves service recepient to pay its service tax. Service Receiver will have to pay the Service Tax as applicable. It is called the partial reverse charge mechanism.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 09 July 2012

When the service tax liability is on reverse mechanism, service receiver has to discharge proportionate service tax liability which he is entitled to.Hence, no exemption for a service receiver, even though the service provider is not liable to service tax based on turnover exemption.

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 09 July 2012

Thanks for your replies.

In that case do we need to get registered under manpower supply taxable category of service as we would be paying output tax and amend our existing RC . Currently we are holding RC under consulting engineer category.

Or categorisation of taxable services have lost its relevance under new negative list regime.

Please enlighten.

Abhishek Todankar (Account Officer) (21 Points)
Replied 09 July 2012

The Deduction on account of Property Tax is based on Property Tax Payable or Actually Paid ?

Please Reply.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 09 July 2012

Originally posted by : Abhishek Todankar
	The Deduction on account of Property Tax is based on Property Tax Payable or Actually Paid ? Please Reply.

It is on actual tax paid and not the amount payable.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 09 July 2012

Originally posted by : Dipjyoti Majumdar
	Thanks for your replies. In that case do we need to get registered under manpower supply taxable category of service as we would be paying output tax and amend our existing RC . Currently we are holding RC under consulting engineer category. Or categorisation of taxable services have lost its relevance under new negative list regime. Please enlighten.

In light of the amended law, there is no such requirement of law to register or rather include individual services in the existing list of services shown in a registration certificate. Your view is correct.

Ritesh Jain (CA, CS in Job) (675 Points)
Replied 10 July 2012

The categorization of service for registration purpose has gone away with this amendment ...and thus there is a blanket registration that covers all services...and thus in invoice the mandatory provisions which were earlier to mention category of service is now not relevant..

LALITH (acCOUNTS OFFICER) (43 Points)
Replied 10 July 2012

A manufactuering company gave contract for security services,and the contractor submits the invoice each month for services with ST showing the breakup of ST.In this case also do the Company(Service Receiver) has to Pay Service TAX?

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 10 July 2012

Mr. Lalith, if the services are received from an agency which is registered under the Securities Association which is a must for every security company, it will not be considered as Manpower Supply. Hence, the entire service tax liability is of the service provider. If the above condition is not meet then it is liable to be considered as manpower supply wherein if the service provider is not a company then service tax will have to be shared in 25: 75 ratio among the service provider and the service receiver.

LALITH (acCOUNTS OFFICER) (43 Points)
Replied 10 July 2012

Dear Ajith

thanks for the infor...

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 10 July 2012

Thanks to all for a fruitful discussion. Another aspect emerges here. If I am a service provider and pay output tax and also pay tax for being a service receiver -- how to show both in the ST 3 return. The system as of now, allows you to tick only once, not both.

I wish to have your valued comments please.

Regards,

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 10 July 2012

Your point is valid and asked many a times by large number of service providers. We are waiting for new set of format to be devised for better presentation of the information, which will be out very soon. So kindly have patience and wait.