tax liability of service taker
This query is : Resolved
22 November 2007
is service tax becomes the liability of service taker if it is not charged by the service provider & the bill amount exceeds by Rs. 750.Pls refer sec.
22 November 2007
You have not indicated the nature of service in your Query. However based on the amount of Rs 750 mentioned in your Query, I presume that the service you intended to refer is the one that is provided by a Goods Transport Agency.
In most of the cases, service provider is liable to pay service tax. In a few cases, exceptions have been made and the other person is made liable to pay tax. Service provided by a Goods Transport Agency is one case of such exception {Rule 2(1)(d)(v)}
As per Explanation 2 to Section 67 "...where the gross amount charged by a Service Provider is inclusive of Service Tax payable, the value of taxable service will be taken as inclusive of Service Tax and then tax payable will be calculated". (Source: Para 5.4 of Taxmann's Service Tax Ready Reckoner)
Keeping the above in view, the service receiver has to require the Goods Transport Agency to segregate the total amount between Basic and Service Tax and show Service Tax amount seperately in the Freight Bills. Alternatively, a one-time letter may be obtained from the Goods Transport Agency that the amounts billed by them are gross amounts and they would pay service tax. In any case, it is desirable for the Service Receiver to obtain Service Tax Registration Number of the Goods Transport Agency.
Service Receiver could manage to thus avoid liability for Service Tax payment on freight charges
In most of the cases, service provider is liable to pay service tax. In a few cases, exceptions have been made and the other person is made liable to pay tax. Service provided by a Goods Transport Agency is one case of such exception {Rule 2(1)(d)(v)}
As per Explanation 2 to Section 67 "...where the gross amount charged by a Service Provider is inclusive of Service Tax payable, the value of taxable service will be taken as inclusive of Service Tax and then tax payable will be calculated". (Source: Para 5.4 of Taxmann's Service Tax Ready Reckoner)
Keeping the above in view, the service receiver has to require the Goods Transport Agency to segregate the total amount between Basic and Service Tax and show Service Tax amount seperately in the Freight Bills. Alternatively, a one-time letter may be obtained from the Goods Transport Agency that the amounts billed by them are gross amounts and they would pay service tax. In any case, it is desirable for the Service Receiver to obtain Service Tax Registration Number of the Goods Transport Agency.
Service Receiver could manage to thus avoid liability for Service Tax payment on freight charges
22 November 2007
Service receiver is a person who avails / consumes services in the course of business or personal use.
There is no provision for registration of a service receiver unless provided in the act.
However following are the services, which require a service receiver to register with the authorities
·Any person receiving service on account of Transport of goods by road
·Mutual Fund Distributor
·Insurance Agent (Insurance Auxiliary services)
The liability to pay service tax is on the service provider except as stated above.
Should you need any additional clarification do let me know.
There is no provision for registration of a service receiver unless provided in the act.
However following are the services, which require a service receiver to register with the authorities
·Any person receiving service on account of Transport of goods by road
·Mutual Fund Distributor
·Insurance Agent (Insurance Auxiliary services)
The liability to pay service tax is on the service provider except as stated above.
Should you need any additional clarification do let me know.
20 May 2008
No, except in certain cases and condition, service provider is liable to pay service tax only on the amount received.
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