Reverse mech charges

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2012 What if Service provider is an individual charges 100% service charge and service receiver pays 100% service tax. Is there any liabilities to SR (i.e 50% should be paid by SR and 50% by SP)

RENGARAJ R.K

RENGARAJ R.K (Expert)
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06 September 2012 Dear author,

Only specific 10 charges are brought under reverse charge, ie., both service receiver and service provider are having the either partial or 100% liability to pay. Not all services.

To name a few, 1) advocate fees
2) Payment to govt/local authority
3) GTA
4) Man power
5) Rent a cab
6) Works contract etc.,

Kindly see notn no.30/2012 service tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2012 I want to confirm about Man power services in works contract under reverse charge if SP has paid his Service Tax i.e 100% on bill value do SR has to pay 50% as mentioned in reverse charges or is it ok if SP has paid his full liability.

RENGARAJ R.K

RENGARAJ R.K (Expert)
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07 September 2012 The word "Man power" service is different in service tax rules. I think you are mentioning about labour involved in works contract. Under reverse charge mechanism, for works contract, the service receiver if he is a company has to pay 50% of the bill amount after deducting the abatement eligible for the type of service like, original works, maintenance works and other works. 50% will be charged by the contractor ie. service provider.

Suppose, if SP himself is a company and does a works contract, 100% service tax (after abatement) can be collected and paid by him. In this case there is no liability for SR. On the other hand if SP is an individual, he should not collect 100% service tax in the bills.

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