Reverse charge
This query is : Resolved
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???
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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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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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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