Amendment in charging service tax

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Ananth (Querist)
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10 October 2012 Dear All,
We are receiving the manpower(Security & Housekeeping) from Some service provider.

We have received their invoice, wherein they have charged 3.09% of Service Tax to the bill.

Is this correct? If yes, how do need to act in this case?

If no, please tel me the correct procedure to charge Service Tax.

Sunil

Sunil (Expert)
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10 October 2012 W.e.f 1/7/2012, the manpower consultant billing to a business entity has to discharge only 25% of the service tax liability as the provider of service. This is 3% tax + .09% cess. The service receiver has to bear the 75% of the tax liability. Therefore you have to register as service receiver and pay 9.27% tax on reverse charge basis.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 October 2012 1. The rate charged is as per the levy called as 'reverse charge' method.

2. But reverse charge will apply only if the service recipient is a business entity registered as a body corporate.

3. Therefore ,the levy of 3.09% is correct if your status is private / public limited company.

4. If the above condition is satisfied, you have to pay the balance service tax @ 9.27% to government after taking registation.

Ananth

Ananth (Querist)
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10 October 2012 Dear Mr Chakrapani,
In this case whole 12.36%(100%) of service tax will be bared by the Service receiver??

Am i correct??

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 October 2012 Yes, 3.09 % to the service provider for onward remittance to government and 9.27% directly to Government.

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Ananth

Ananth (Querist)
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11 October 2012 Dear Mr Chackrapani,
Is it possible to offset this 9.27% of Service tax with our input tax?

Or is it compulsory to make the Payment to Govt?

Sunil

Sunil (Expert)
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11 October 2012 You can claim this as your input. Only get clarification of body corporate. Logically it would mean ltd. company but once when I had not registered a firm the ST officer had told me that body corporate in Service tax also means firms.

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