Billing on works contract service
This query is : Resolved
Deepak Narayanan
(Querist)
21 November 2012
With he introduction of Reverse Charge mechanism in service tax service receiver is liable for 50% of the service tax. My confusion in this outset is as follows,
Normally contractors are billing based on the agreed rates for the tendered BOQ (Description of work)and the service tax is also factored in on the rates agreed.
Query 1 - As rates are all inclusive in the bill claimed service tax is not shown separated.
Query 2 - as 50% liability is on receiver can the same be deducted and paid.
Normally contractors are billing based on the agreed rates for the tendered BOQ (Description of work)and the service tax is also factored in on the rates agreed.
Query 1 - As rates are all inclusive in the bill claimed service tax is not shown separated.
Query 2 - as 50% liability is on receiver can the same be deducted and paid.
Viral Vora
(Expert)
21 November 2012
Query 1 :- Even if service tax is not shown seperately it has has to be calculated in reverse manner .
Query 2 :- Yes the service receiver as he is paying 50% of tax payable, he can deduct and pay.
Query 2 :- Yes the service receiver as he is paying 50% of tax payable, he can deduct and pay.
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CA. Subhash Dangi
(Expert)
21 November 2012
Under Reverse charge mechanism, it is better to pay Service Tax as per the joint liability cast upon under Section 66 B of the Finance Act. Even if the service provider has paid 12.36%, Dept may raise a demand on you. Hence recover the excess amount of ST paid from the service provider and discharge your liability.
The service provider (Work contractor) should show 50% service tax separately being his liability under service tax.
If service provider charged ST in his Invoice, the service receiver has to remit 50% ST liability. While making final payment to the work contractor, the receiver has to deduct/recover the 50% of ST out of total ST charged under reverse charge mechanism.
The service provider (Work contractor) should show 50% service tax separately being his liability under service tax.
If service provider charged ST in his Invoice, the service receiver has to remit 50% ST liability. While making final payment to the work contractor, the receiver has to deduct/recover the 50% of ST out of total ST charged under reverse charge mechanism.
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