Service tax reverse charge

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 March 2014 sir, my client has received bill of Rs.40500 as bill for manpower supply from a firm. he has not separately charged service tax on it.
My client while booking service tax liability, has treated amount as inclusive of service tax. and is booking liabilityof service tax of Rs.3341(40500/112.36%*12.36%*.75).
As per my understanding, when service provider is not charging service tax on its bill we cannot assume the bill amount to be inclusive of service tax. hence service tax liability should have created by Rs.3754/(40500*12.36%*.75).
Please clarify what amount shall be considered to create the Service tax liability and whether the amount should be deducted from the bill of service provider or it should be treated as additional cost to the service receiver

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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04 March 2014 If service tax has not been charged by the service provider then the amount CANNOT be treated as inclusive of service tax.

The correct calculation is 40,500*12.36%*75%

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Querist : Anonymous

Querist : Anonymous (Querist)

05 March 2014 I need further clarification what if service provider and service receiver has entered into an agreement stating the payment shall be considered inclusive of all taxes.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 March 2014 If there is an agreement, then the amount shall be considered inclusive of service tax and shall be grossed up.

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