How to calculate tax liablity under reverse charge ?
This query is : Resolved
28 October 2012
Sir
My partnership firm avail service under rent a Cab scheme.I am dealer of goods only.
We know that Rent a Cab scheme is eligible for 60% abatement. Also, as per partial reverse charge mechanism, my liability as service provider is only to the extent of 40% with abatement. Since i can not utilise service tax paid as cenvat, does this mean that Service tax is to be paid by me as "Value of Service * 40% * 40% ? For eg. for payment of 1000 rs, my service tax is 12.36% of Rs. 160 ?
My partnership firm avail service under rent a Cab scheme.I am dealer of goods only.
We know that Rent a Cab scheme is eligible for 60% abatement. Also, as per partial reverse charge mechanism, my liability as service provider is only to the extent of 40% with abatement. Since i can not utilise service tax paid as cenvat, does this mean that Service tax is to be paid by me as "Value of Service * 40% * 40% ? For eg. for payment of 1000 rs, my service tax is 12.36% of Rs. 160 ?
29 October 2012
No the service tax to be paid as under by service recipient:-
Abated Value: Rs1000 X 40%X 12.36% = 49.44
non abated value: Rs 1000 X 12.36% X 40%= 49.44
From above it is evident that the service recipients liability is restricted to net rate of 4.944% of the amount of bill.(excl service tax).
Hope this would settle the issue...
Abated Value: Rs1000 X 40%X 12.36% = 49.44
non abated value: Rs 1000 X 12.36% X 40%= 49.44
From above it is evident that the service recipients liability is restricted to net rate of 4.944% of the amount of bill.(excl service tax).
Hope this would settle the issue...
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