Service tax on maintainance of machine

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This query is : Resolved

Vipin Kumar Sharma (Querist)

05 December 2012 DEAR SIR

WE ARE PVT LTD CO, & SERVICE RECEIVER, I WANT TO DEPOSIT SERVICE TAX ON MAINTAINANCE OF MACHINES LABOUR CHARGES. PLEASE TELL ME THE RATE OF S. TAX WITH ABATEMENT

100X12.36%
OR
75X12.36%
REGARDS

@VaibhavJ

@VaibhavJ (Expert)

05 December 2012 Hi

What is rate of ST charged to you by your Service Provider.

Thanks//Vaibhav

Vipin Kumar Sharma

Vipin Kumar Sharma (Querist)

05 December 2012 SIR HE IS NOT CHARGING ANY SERVICE TAX. HE IS INDIVIDUAL

Jayant Bothra

Jayant Bothra (Expert)

05 December 2012 Dear Vipin,

IF individual is not charging then he might be availing the exemption limit of Rs. 10 Lakhs which is provided to a Samll Service provider.

Your case is covered Work Contract.

The Labour Charges paid is do covered in Work Contract as per which the Value of service is 70% of gross amount charges in your case.
Moreover, the reverse charge mechanism provides that the srevice tax liability is needed to be paid both by service receiver and provided.
Both will pay 50-50%. So, even if he is availing the exemption limit their is no such limit for you. YOU NEED TO PAY SERVICE TAX.
Let me explain with an example:-
If the Gross amount of Service provided is Rs. 120 including vat of Rs. 20/-.
Service tax shall be charged on (Rs. 120-20)X 70% = Rs. 70/-
Service tax = 70 X 12.36% = 8.652
Service tax liability on Service provider = 8.652 X 50% = 4.362 (Since he is exempted from Service tax. So, he need not to pay anything)

Service tax liability to be discharged by you = 8.652 X 50% = 4.362/-

Regds

CA JAYANT BOTHRA
M: 9873-626-020

@VaibhavJ

@VaibhavJ (Expert)

05 December 2012 Thanks Jayant for clarification.

Dear Viipin i hope your query is resolved.

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