Wct vrs service tax -reverse mechanism

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Siddharth Nanda (Querist)

28 August 2012 Dear sir,

Wheather we can deduct WCT from a vendor from whose bill we are also deducting Servic receiver's Service tax (50%) under Reverse mechanism?

RENGARAJ R.K

RENGARAJ R.K (Expert)

28 August 2012 For works contract service, the contractor will pay service tax on 50% the bill after deducting abatement. The service receiver, company, will pay the same value to the government. The service tax should not be deducted in the contractor bill and it has to be paid by the SR. Income tax TDS is separate and it will be deducted by SR based on the bill amount.

Siddharth Nanda

Siddharth Nanda (Querist)

28 August 2012 Thanks Mr.Rengaraj but the second part of my query was that "WHEATHER WCT DEUCTEBLE (4.8%) IS INDEPENDET OF SERVICE TAX DEPOSITED BY SERVICE RECEIVER"? in other words is there any direct/indirect relation between wct liability deduction & Service tax liability (50% share) deposit by service receiver?
Regards

CA Vibhash Kumar Sah

CA Vibhash Kumar Sah (Expert)

28 August 2012 If Service receiver has discharged 50% of Service tax liability inder reverse charge mechanism, the service provider has to dischsrge only 50% of the service tax Liablity.i.,e even if Service provider is under composition scheme (WCT @4.8%), he need to dischsrge only 50% of his liability i.e. 2.4% only.

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