Reverse charge
This query is : Resolved
Rajiv sharma
(Querist)
29 November 2012
Reverse Charge under Service Tax -
X ltd takes a construction contract from Y and sub contracts the work to Z.
Initially, in this Case even though X Ltd is a Service Provider. Will X Ltd become a Service Receiver if he sub contracts the work to Z???
X ltd takes a construction contract from Y and sub contracts the work to Z.
Initially, in this Case even though X Ltd is a Service Provider. Will X Ltd become a Service Receiver if he sub contracts the work to Z???
Amol S Joglekar
(Expert)
29 November 2012
Yes, it is service receiver so far as Z is concerned AND service provider so far as Y is concerned.
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Rajiv sharma
(Querist)
30 November 2012
Thanks for the reply Amolji.
Please confirm if the following is ok then:
1) X ltd will pay 50% of the service tax for being service recipient .
2) Z will collect 50% of the service tax on the work contract.
3) X Ltd will bill and collect service tax on the entry work contract charged to Y.
4) X ltd can claim Cenvat credit of 50 % Service Tax paid as Service Recipient and 50 % paid to Z ltd for sub contracting.
Please confirm if the following is ok then:
1) X ltd will pay 50% of the service tax for being service recipient .
2) Z will collect 50% of the service tax on the work contract.
3) X Ltd will bill and collect service tax on the entry work contract charged to Y.
4) X ltd can claim Cenvat credit of 50 % Service Tax paid as Service Recipient and 50 % paid to Z ltd for sub contracting.
04 December 2012
X Ltd. :
(a) Charge 100% service tax on the invoice raised on Y.
(b) Pay 50% of service tax on contract charges paid to Z (assuming Z is an individual or HUF or firm).
Z:
Charge 50% service tax on the invoice raised on X Ltd.
X Ltd. can claim CENVAT credit of 50% paid to Z and 50% paid under reverse charge.
(a) Charge 100% service tax on the invoice raised on Y.
(b) Pay 50% of service tax on contract charges paid to Z (assuming Z is an individual or HUF or firm).
Z:
Charge 50% service tax on the invoice raised on X Ltd.
X Ltd. can claim CENVAT credit of 50% paid to Z and 50% paid under reverse charge.
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Rajiv sharma
(Querist)
04 December 2012
Thanks Siddhartha for the confirmation.
Regards, Rajiv Sharma
Regards, Rajiv Sharma
04 December 2012
You are welcome. You should use the thanks button to convey your thanks.
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