Bearing of the service tax liability
This query is : Resolved
13 July 2015
Hi,
The service in question is under the purview of reverse charge mechanism as per the service tax laws where the service provider is non resident and receiver is a resident.
The Rule 3 of POP Rules, 2012 is applicable here.
The service tax is normally borne by the service receiver but in this case the contract between the parties specifies that the contract price includes all applicable taxes (direct and indirect).
Quote:
"all charges quoted are inclusive of applicable taxes. Supplier will account to the appropriate authorities for ‘its’ income tax, applicable indirect taxes, any applicable statutory contributions and all other applicable taxes, liabilities, charges and duties."
Unquote:
So, in this case would I gross-up the contract value and do a reverse calculation to arrive at the service tax figure or the service receiver would still bear the service tax liability?
Please help.
Thank yoou
The service in question is under the purview of reverse charge mechanism as per the service tax laws where the service provider is non resident and receiver is a resident.
The Rule 3 of POP Rules, 2012 is applicable here.
The service tax is normally borne by the service receiver but in this case the contract between the parties specifies that the contract price includes all applicable taxes (direct and indirect).
Quote:
"all charges quoted are inclusive of applicable taxes. Supplier will account to the appropriate authorities for ‘its’ income tax, applicable indirect taxes, any applicable statutory contributions and all other applicable taxes, liabilities, charges and duties."
Unquote:
So, in this case would I gross-up the contract value and do a reverse calculation to arrive at the service tax figure or the service receiver would still bear the service tax liability?
Please help.
Thank yoou
13 July 2015
Yes gross up the contract value and do reverse calculation to arrive at the service tax. Service receiver is liable to pay service tax under RCM but it can be adjusted against payments as per contract terms.
13 July 2015
Thank you sir for your reply,
Is there some case law or legal pronouncement substantiating the grossing up?
Thank you
Is there some case law or legal pronouncement substantiating the grossing up?
Thank you
13 July 2015
It is as per your agreement terms. No problem it will stand before the law. Such is the practice followed by others in case of inclusive contracts.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CAPITAL GAIN BASE ON NOTIFICATION
- Taxable or Tax exempt
- ADVANCE PAYMENT OF ADVOCATE
- TDS Deducted AY-2013-14 Not Reflected in 26as
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Demand Outstanding AY 2013-14 TDS Deducted not shown in 26as
- Eway bill not cancelled within 24 hous what can be due
- UNWANTED CREDIT BALANCE OF GST AS PER BOOKS
- Eway bill generation from place other than registeted
- Query – TDS on purchase of land from NRI under Income-tax Act, 2025
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
