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Reverse charge
In reverse charge mechanism (Rate of tax 14%)
exp. Mr. A a service provider (liability to pay under reverse charge 25%) and bill raise of Rs 11350 350 is service tax)
Mr B is service receiver (pay balance 75%) then what amt of credit allowed to Mr B 1050 or 1400 and what entry pass Mr B in his book.
Replies (4)
The service receiver will get full credit, 25% portion based on Invoice and 75% portion based on Challan of service tax payment. Rule 9 of CENVAT Credit Rules
In books of Mr. B,
1) On reciept of Invoice,
a) Exp. A/c Dr. 11000
Input Cenvat on Exp. Dr. 1400
To Mr.A 11350
To Service tax on RCM payable 1050
(Being Expense Invoice booked and Liability of Service tax on RCM basis is booked)
25 % input credit on basis of Invoice. 75 % on basis of challan when paid
Thanks for help
.
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