Reverse charge mechanism

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2015 There is a work contract service (maintenance service of good) by service provider to service receiver in which reverse charge mechanism applicable?
service provider raises bill of rs 25000 to service receiver
service provider is exempted from service tax due to below the threshold limit.

now service receiver how to calculate and pay to service provider
option 1
25000*70% = 17500*14%=2450*50%=1225
pay to service provider 25000-1225=23775
pay to govt 1225

option 2
pay to service provider 25000
pay to govt 1225

which option is correct?
if nothing is mentioned in contract for rate to inclusive or exclusive then which option is correct?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 July 2015 Option 2 is correct. If nothing is mentioned about service tax you can't deduct.

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