Reverse charge on works contract, contractor charged 100% st

Queries 535 views 1 replies

My client, say ABC (P) Ltd., which is a Body Corporate, has received invoices from its contractor's (partnership firms & companies) who are charging full service tax @ 12.36% on service portion of the bill. But according to Reverse Charge created vide Notification No. 30/2012, wef 01-07-2012, the firms (among others) are required to bill only 50% of the service tax and 50% is the liability of the service receiver i.e. ABC (P) Ltd. Kindly advice me:

1) Should my client lawfully deduct 50% service tax from the bill of the contractors while making bill payment?

2) Should a revised Invoice be received from them?

3) Service Tax is payable on balance 50% portion by my client only after payment of bill to contractor and thereafter Cenvat Credit available. Is there any timelimit for making the payment to contractor?

4) If my client pay 100% service tax to the contractor (service provider), can it validly claim cenvat credit for 100% ST?

5) How to reflect these transactions in the half-yearly ST return?

Thanks

 

Replies (1)

Please see my reply....

1) Should my client lawfully deduct 50% service tax from the bill of the contractors while making bill payment? - Yes he can if it is as per the new rule...

2) Should a revised Invoice be received from them? - This also can be possible. Your client has to inforn to the vendor about the new rule and sought for revised bill.

3) Service Tax is payable on balance 50% portion by my client only after payment of bill to contractor and thereafter Cenvat Credit available. Is there any timelimit for making the payment to contractor? - as soon as you book the expenditure in your accounts your liability starts....

4) If my client pay 100% service tax to the contractor (service provider), can it validly claim cenvat credit for 100% ST? - Yes he can but please check with others...

5) How to reflect these transactions in the half-yearly ST return? - the revised return format provides all the possible fields.


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