Abated value means where the component of goods or material is not involved in the total value of services and non abated value is where the component of goods and material is involved. The relevant para of education guide has been paid for your reference. Hope your query is resolved.
How is the service recipient required to calculate his tax liability under partial
reverse charge mechanism? How will the service recipient know which abatement
or valuation option has been exercised by the service provider?
The service recipient would need to discharge liability only on the payments made by him.
Thus the assessable value would be calculated on such payments done (Free of Cost material
supplied and out of pocket expenses reimbursed or incurred on behalf of the service provider
need to be included in the assessable value in terms of Valuation Rules). The invoice raised
by the service provider would normally indicate the abatement taken or method of valuation
used for arriving at the taxable value. However since the liability of the service provider and
Income Tax return Forms Ay 2012-13
service recipient are different and independent of each other, the service recipient can
independently avail or forgo an abatement or choose a valuation option depending upon the
ease, data available and economics.