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Abatement vs reverse charge mechanish-service tax

944 views 2 replies

ravi

senior accountant

507 Points Posted on 09 April 2014

My client rented cabs - the tour operator charged 40% of service tax i.e 4.944%, now my question is if the provider of service choses abatement scheme then does the receiver of service tax need not pay anything or should the receiver needs to pay balance 60% of servie tax i.e 7.41% pls explain

Replies (2)

Vishal Gupta

59 Points Posted on 09 April 2014

1. If the service provider avails abatement scheme

Liability of service provider-NIL

Liability of service receiver-100% of service tax {40%} charged by service provider

For eg.- value-100, service tax charged by service provider-4.944 so service receiver has to pay only 4.944(100%*4.944) as service tax on reverse charge.

2. If the service provider doesnt avail abatement scheme

Liability of service provider-60% of service tax

Liability of service receiver-40% of service tax

For eg.-value-100, service tax charged by service provider-12.36 so here service provider has to pay 7.416(60%*12.36) directly to govt. & service receiver to pay 4.944(40%*12.36) on reverse charge.