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Reverse charge mechanism for works contract

ankush wakhure (account executive) (59 Points)

29 May 2015

Dear sir,

I am working with pvt ltd company, I have one query about service tax ayment of Works contract under RCM,

our company started new plant construction at other place. we have paid adavance to construction company of Rs.200000 (13-14) & Rs.1500000 (14-15)

still we have not paid service tax of this transaction

please let us me know the procedure of service tax payment & how much intreast & penalty liable to pay

can we will take cenvat credit of service tax after payment

please advice us

Regards,

Ankush

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6 Replies

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 29 May 2015

Reverse Charge under works contract arises if payment is made by HUF/Individual/Partnership Firm/AoP , whether registered or not, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory;

In your case, payment is made by Body Corporate.

Hence, reverse charge is not applicable and your company is not liable to pay service tax.

[Notification Number 30/2012-ST]

Rajesh Chawhan (Service) (29 Points)
Replied 29 May 2015

Dear Mr. Gupta, We are pvt Ltd co., it means no need to pay reverse mechanism tax on work contract? Or any labour job done from anybody? Pl advise.

Rajesh Chawhan (Service) (29 Points)
Replied 29 May 2015

Dear Mr. Gupta, We are pvt Ltd co., it means no need to pay reverse mechanism tax on work contract? Or any labour job done from anybody? Pl advise.

Rakesh Kumar (Sr. Accounts Manager) (22 Points)
Replied 30 May 2015

As per service tax rules service tax under RCM is payable for work contract , hiring of motor cab for carry passenger(hirer shouldn't in same business) and supply of manpower if service provider is Individual,HUF,AOP and receiver is Body corporate. As in your case both service provider and receiver are registered co. Then your company need not to pay ST under RCM.