Accounting treatment of service tax in rcm

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This query is : Resolved

CA Durgesh Sharma (Querist)

11 December 2013 Sir,
I want to know the Accounting entry when service provider is under RCM.
For eg. in case of WCT, value of services provided is Rs. 100 then with which amount we will debit the service receiver. Rs. 106.18 or Rs. 112.36?

Ganeshbabu K

Ganeshbabu K (Expert)

11 December 2013 You have to debit the service receiver for billing amount only(which will be 106.18 for wct providers)
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crediting to income account
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if rcm not applicable to service receiver you have to bill for full service tax

CA Durgesh Sharma

CA Durgesh Sharma (Querist)

11 December 2013 thanks,
But How will the service receiver come to know that there is a liability to pay service tax on him..

Ganeshbabu K

Ganeshbabu K (Expert)

12 December 2013 it is the responsibility of service receiver to know about his obligation and law in force
..
service provider is not liable for service receiver ignorance,,service provider have to go for billing as per below in case of reversecharge applicable
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Billing by service provider

1)Service provider should charge only his part of service tax

2)Service receiver to pay service tax of his part by GAR-7 challan

3)Service receiver liable for only his part and not entire amount, even if service provider does not charge his portion of service tax.

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