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Service receiver to pay tax from 1 july 12

CA in service & CS. dipmaj@ rediffmail.com

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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senior associate


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.

 
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Taxation Manager


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.

 
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CA in service & CS. dipmaj@ rediffmail.com

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.

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

Please Reply.

 
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Taxation Manager


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.

 
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Taxation Manager


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.

 
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CA, CS in Job


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..

 
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acCOUNTS OFFICER


 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?

 
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Taxation Manager


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.

 
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