Accounting entry in case or partial reverse charge

Ashwani,

Clause (o)(vI) of Sec 66D specifies that service of transportation of passengers in metered cabs, radio taxis or auto rickshaws as a non-taxable service. Does the service you are speaking gets covered under this clause? Kindly correct me if i am wrong. The charge is decided by seeing the meter or agreed amount?

 

Regards,

Prashanth.

No, It is a taxable service, not a non taxable one.

Sorry Ashwani..I just noticed that rent a cab service is classified under Hiring of Goods including Motor Vehicles. In all the 3 cases i think the bill amount has to be charged off to P & L as there is no CENVAT Credit.

A) Here 100% of the service tax on 40% of the value of service is to be paid by the service recipient. Since no service tax is levied on the bill, the bill amount as well as service tax to be paid by the recipient is to be charged off to P & L A/c. TDS has to be deducted on the bill amount of Rs 100.

C) This is very much similar to A) but the only difference is that the service tax is levied in the bill. Hence charge off the entire bill amount to P & L and deduct TDS on the same.

B) In this case i think the servie tax mentioned is 60% of the bill to be remitted by the service provider and why is it to be mentioned in the invoice??Treatment is the same to charge off the bill amount and deduct TDS on the bill amount and the service tax portion to be remitted by the recipient is also to be charged off to P & L.

Kindly correct me if i am wrong.

 

Prashanth.

 

No, actually my query is do we have to charge cost of service tax (on which input is not available) separately in P&L a/c or we should clubbed this as part of taxi hire charges in P&L A/c, where no amount of service tax is mentioned on the invoice by service provider. Kindly conclude in terms of Service tax act & Income Tax Act.

To have clarity and control i think it can be charged off to P & L under a separate head. Anyways it is going to be charged off as you dont have an option. Now that POT Rules has been introduced service tax is subject to 43 B. So disallowance may be effected by the AO if it has not been remitted properly. So just to have control charge it off as a separate entry. Kindly correct me if i am wrong.

Prashanth.

You can show that input seperately if u can claim that it as input. In case of your scenario if the service provider has claimed abatement you are paying reverse charge 100%. So the complete bill + reverse charge will be cost to thecompany where u cannot claim input credit where in other cases where you are paying partial reverse charge where u can show it seperately and can claim input