Regarding input tax
This query is : Resolved
03 July 2014
Respected CCI members,
As per Reverse charge mechanism ,Some part of Service tax is payable by service receiver and some by service provider.My query is that service provider does not follow rules and bill at 12.36% for Man power and security services ; so can service receiver claim full 12.36% as ITC????
As per Reverse charge mechanism ,Some part of Service tax is payable by service receiver and some by service provider.My query is that service provider does not follow rules and bill at 12.36% for Man power and security services ; so can service receiver claim full 12.36% as ITC????
03 July 2014
If service provider is Company he will claim full 12.36% of service tax from service receiver in his invoice
.
.
but if service provider is individual/partnership and providing service to business entity registered as body corporate
.
.
Service provider not correct in claiming full service tax amount in his invoice
.
.
he should charge only to the extent he is liable to collect
.
.
EVen he claim full service tax it is recommended to pay only his part of service tax to him and pay balance payable to dept directly under ur service tax registration number through GAR7 challan as a service receiver
.
.
.
.
Because legal liability is on you to discharge service tax,,Later on deppartment may insist on you to pay service tax on these
.
.
.
.
but if service provider is individual/partnership and providing service to business entity registered as body corporate
.
.
Service provider not correct in claiming full service tax amount in his invoice
.
.
he should charge only to the extent he is liable to collect
.
.
EVen he claim full service tax it is recommended to pay only his part of service tax to him and pay balance payable to dept directly under ur service tax registration number through GAR7 challan as a service receiver
.
.
.
.
Because legal liability is on you to discharge service tax,,Later on deppartment may insist on you to pay service tax on these
.
.
03 July 2014
If you already made full payment to service provider get a certificate/proof from him that total received by him from you was paid to department with out any failure so that later if any difference with department you can claim that there is no revenue loss to department
.
.
But dont let this happen again,,,pay directly to department under your service tax registration number to the extent of your liability as a service receiver to avoid this differences and harrasement from dept.
If you already made full payment to service provider get a certificate/proof from him that total received by him from you was paid to department with out any failure so that later if any difference with department you can claim that there is no revenue loss to department
.
.
But dont let this happen again,,,pay directly to department under your service tax registration number to the extent of your liability as a service receiver to avoid this differences and harrasement from dept.
20 July 2025
Hey! On your query about Input Tax Credit (ITC) under Reverse Charge Mechanism (RCM) for Manpower and Security Services:
Key points:
Under RCM, service receiver is liable to pay service tax on the portion that the service provider does NOT pay.
If the service provider charges full 12.36% service tax (which includes both provider’s and receiver’s liability), but the provider has not actually deposited the full tax, then the service receiver should pay the balance directly to the department.
Only the service tax actually paid to the government (either by the service provider or by the service receiver) can be claimed as ITC.
So, can the service receiver claim full 12.36% ITC?
No. The receiver can claim ITC only to the extent of the service tax actually paid to the government.
If the provider has paid only part of the service tax and the receiver pays the rest under RCM, then ITC can be claimed on the total of both these amounts.
If the provider has not paid his portion, and receiver has not discharged his RCM liability by paying to the government, then receiver cannot claim ITC on the full 12.36% because full tax has not been paid.
Key points:
Under RCM, service receiver is liable to pay service tax on the portion that the service provider does NOT pay.
If the service provider charges full 12.36% service tax (which includes both provider’s and receiver’s liability), but the provider has not actually deposited the full tax, then the service receiver should pay the balance directly to the department.
Only the service tax actually paid to the government (either by the service provider or by the service receiver) can be claimed as ITC.
So, can the service receiver claim full 12.36% ITC?
No. The receiver can claim ITC only to the extent of the service tax actually paid to the government.
If the provider has paid only part of the service tax and the receiver pays the rest under RCM, then ITC can be claimed on the total of both these amounts.
If the provider has not paid his portion, and receiver has not discharged his RCM liability by paying to the government, then receiver cannot claim ITC on the full 12.36% because full tax has not been paid.
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