09 October 2014
In respect of Works contract services what amount should be shown as turnover. For example value of service is Rs.100.00 and Rs.70.00 is service component, 50% of ST to be collected by the Service Provider and 50% of ST to be to be payable by the Service Receiver under reverse charge.
If we show Rs.100.00 as turnover and ST as 12.36% , the system will automatically calculate st as Rs.12.36
If we show ST rate as 4.326 the system says the rate is not as per the rule.
Do we have to reduce the turnover so that it will adjust to ST collected and paid.
The position is worse when all types of works contract services are provided with service component of 70%, 40% and 60%/
09 October 2014
Show the gross amount claim 30% as abatement. If you choose the right service, depending upon the service you can claim 30% and 60% abatement. You can not show ST rate as 4.326.
09 October 2014
I can show 30% as abatement. But what about reverse charge of 50% to be payable by the service receiver. I am collecting only 50% of 70%
09 October 2014
I can show 30% as abatement. But what about reverse charge of 50% to be payable by the service receiver. I am collecting only 50% of 70%
12 October 2014
I think the question is not properly understood by you. A10.2 and A10.4 is question applicable to service receiver under reverse charge. In my case my client is only service provider. He will collect tax , if Rs.100 is the service value, on Rs.70.00 50% of 12.36%. That is effective rate of 4.326%.
Now I have to present the figures in ST3. If I show turnover Rs.100 in B1.1, as you said I am not permitted to type Rs.30 at B1.11 as abatement. I have noticed that I can not type anything. Now the 2nd confusion is what is the rate to be typed in B1.15. If I type 12% automatically the system calculates at 12% , the tax collected is 50% of 70%.
25 July 2025
This is a classic tricky scenario in ST-3 return filing for works contract service with partial service component and reverse charge tax sharing. Let me break it down clearly:
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### Your case:
* Total value (turnover) = Rs. 100 * Service component = 70% of Rs. 100 = Rs. 70 (taxable value) * You collect service tax on 50% of Rs. 70 under normal charge = Rs. 35 taxable value for you * The other 50% of Rs. 70 (Rs. 35) tax is payable by the service receiver under reverse charge (so you don’t collect this portion)
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### How to fill ST-3?
1. **Turnover (B1.1):** You should enter **Rs. 100** as gross turnover (gross value of works contract service).
2. **Abatement (B1.11):**
* For works contract services, 30% abatement is generally available on gross amount if applicable. * So you can enter **30** here (30% of Rs. 100). * This will make your taxable value Rs. 70 (100 - 30).
3. **Service tax rate (B1.15):**
* You enter the **standard service tax rate of 12% (or applicable rate)** here. * The system will calculate tax on Rs. 70 (after abatement), which is Rs. 8.4 (12% of 70).
4. **Reverse charge portion (B2.7 and others):**
* Since 50% of the service tax (which is Rs. 8.4 \* 50% = Rs. 4.2) is payable by the service receiver, you need to declare this in the **reverse charge section**. * The value on which reverse charge is applicable is Rs. 35 (half of taxable value). * Enter Rs. 35 in the reverse charge value section (B2.7 or applicable). * Enter the tax amount payable under reverse charge accordingly.
5. **Tax collected and paid by you:**
* You collected tax only on Rs. 35 (50% of taxable value), so tax paid by you = 12% on Rs. 35 = Rs. 4.2.
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### Important:
* **Do NOT try to enter 4.326% as tax rate** in ST-3. The system only accepts standard service tax rates (e.g., 12%). * Instead, **use abatement** to reduce the taxable value. * The reverse charge portion is separately reported in the reverse charge section and doesn’t reduce your taxable turnover or abatement claim.
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### Summary:
| Field | Value | Notes | | ------------------------ | ------- | --------------------------------------------- | | Gross Turnover (B1.1) | Rs. 100 | Total value of contract | | Abatement (B1.11) | Rs. 30 | 30% abatement on works contract | | Taxable Value | Rs. 70 | (100 - 30) | | Service tax rate (B1.15) | 12% | Standard service tax rate | | Tax on taxable value | Rs. 8.4 | 12% of 70 | | Tax paid by you | Rs. 4.2 | 50% of Rs. 8.4 (you collect this) | | Tax paid by receiver | Rs. 4.2 | 50% paid by service receiver (reverse charge) |
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If you want, I can draft a stepwise filling guide for your ST-3 form sections based on this. Would you like that?
CAclubindia
