Can service tax input setoff with output tax of abatement

abatements 1122 views 2 replies

shahul hameed

ACCOUNTANT

25 Points Joined September 2011

Sirs,

Please clarify: Our private limited company has input service tax @ 14% paid for various services received.

We pay freight charges (GTA) for which 75% abatement on service tax is allowed. We remit 3.5% service tax directly to the Central Govt. Can we set off this GTA service tax (3.5%) liability with the regular input service tax (14%).

Thanking you in advance

Shahul Hameed

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9434 Points Joined December 2011

Service Tax liability arise when consignment note is issued and a GTA will be liable to pay Tax only when both Service Provider and Service Receiver are individuals.
The rate of Tax is @ 25% (i.e., abated value as seen from the above table), if the GTA avails Cenvat Credit to set them off with its output liability;
If the GTA avails any Cenvat Credit, the rate of Tax would be @ 100% value.

(f) Services provided by Government or local authority

Reverse charge applies to all Services except certain specified Services;
The Government Department needs to be registered and pay Service Tax on support Services of –

ü Renting of immovable properties and

ü Speed post, express parcel, life insurance.