Reverse charge mechanism

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Rajesh Nune

ARTICLE STUDENT

53 Points Posted on 25 September 2013

Hii Friends... can u please clarify my doubt regarding reverse charge...

how a service provider can raise a bill for service tax with reverse charge... i mean whether he should show the total service tax payable or he should show only the amount payable by him (excluding payable by receiver).. and how he can show service tax expenditure in profit & loss account i.e., whether he has to show amount paid by him(excluding amount to be payable by service receiver under partial reverse charge mechanism)..or he has to show total service tax paid for that service(paid by both parties)..

Replies (3)

CA girl

Article Trainee-CA Final

857 Points Posted on 25 September 2013

Hey, according to the rules of reverse charge mechanism the service provider has to charge only that portion of service tax for which he is liable to the government. For example if it is a security services bill of Rs.100 then the service provider should give a bill as follows:

Service value - Rs.100

St @ 3.09%(25% of 12.36%)- Rs4

Total- Rs.104

Rajesh Nune

ARTICLE STUDENT

53 Points Posted on 25 September 2013

thanq mam.. so what the amount we should show as service tax paid (exp) in p& l account..?

CA Vivek Goyal

Practising CA

135 Points Posted on 29 September 2013

Dear Rajesh,

Whatever amount you are paying as Service Tax will be recovered by you from service receiver so there is no expenses belongs to you. So no amount will be debited in your profit and loss a/c.