Service tax for consulting firms

Queries 541 views 12 replies

Lakshman

Director

30 Points Joined March 2015

Dear All,

I am into consulting firm and i do place a candidate as per customer's requirement and do raise a bill for the consulting charge as 8.33% of the CTC of the candidate. I have been doing this from last 4 years and i have not crossed 5 lakhs in one year also. So there no necessary for me to apply the service tax number and do claim the same with the bills which i raise to the customers.

But now a customer has deducted my payment saying service charges are applicable. I also explained him that only the service provider should raise the bill with service tax 12.36% in the bill and the customer should pay the total amount . But now he has deducted the TDS and also service tax from the billed amount ( I am a service provider ) . And he says from 2012 that law is changed and we will deduct in future also. Can any one explain in detail regarding service tax and when it is applicable also ?

Thanks for people who give the answer and solution for this .

Replies (12)

sesha

accounts executive

1101 Points Joined August 2009

u can just register and can make nil returns.otherwise without registration u carried out the business,and then u are coming voluntary registration they can deduct tds only and they cannot deduct service tax . My idea ucan just make voluntary registration once if uturnover increases u can intimate clients andthen umake nil returns once uturn over increases ucan chargeservicetax to clients and client can claimserviceinputifuturnoverincreases

Lakshman

Director

30 Points Joined March 2015

But now as my limit is not exceeded , i am not applicable to apply and Which means only when i get the Service Tax number , i can raise the bill with service tax - 12.36 % and then for which the customer or the recipient sholud pay me the payment including service tax.

So as of now the service tax deducted to my bill amount is not valid right ? provided if my limit does not exceed for the current year.

sesha

accounts executive

1101 Points Joined August 2009

if they deduct service tax means ask them to definetely claim service tax input. pls tell if uarenothaving the st no andtheycannot deduct servicetaxon u bills

sesha

accounts executive

1101 Points Joined August 2009

ihave sendattachementfile ufirmscomes under manpowersupply if ucross turnover 25%willbe payableby uand75%should payable byserice receiver.

Lakshman

Director

30 Points Joined March 2015

Dear Sesha,

I have told them but they are telling as per act in 2012 :

Notification No. 30/2012-Service Tax

Table

Sl.No.	Descripttion of a service	Percentage of service tax payable by the person providing service	Percentage of service tax payable by the person receiving the service
1	in respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business	Nil	100%
2	in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road	Nil	100%
3	in respect of services provided or agreed to be provided by way of sponsorship	Nil	100%
4	in respect of services provided or agreed to be provided by an arbitral tribunal	Nil	100%
5	in respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services	Nil	100%
6	in respect of services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994	Nil	100%
7	(a) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business (b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business	Nil 60%	100 % 40%
8.	in respect of services provided or agreed to be provided by way of supply of manpower for any purpose	25%	75 %
9.	in respect of services provided or agreed to be provided in service portion in execution of works contract	50%	50%
10	in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory	Nil	100%

And all these conditions are applicable only if the Limit exceeds right ?

Notification No. 30/2012-Service Tax

Thanks for your replies.

And only from this month bill they are deducting and i have asked them as you said how will you deduct without service tax no. Let me check with him and reply you .

sesha

accounts executive

1101 Points Joined August 2009

hi enclosed excelsheet

sesha

accounts executive

1101 Points Joined August 2009

if u concern comes under sl no 8 once uturnover exceeds then uservices provider 25%liabletopayservicetax andbalance 75%payablebyservice receiver.

Lakshman

Director

30 Points Joined March 2015

The receiver company says that they are pvt ltd company so they have the necessity to pay the 75 % service tax for my bill and so they deduct my 25 % also and pay . They say if the limit does not exceed also ,if the servicer receiver is Pvt ltd then service tax is applicable.

Is this correct. As they are Pvt Ltd company they pay the 75 % service tax of the bill amount and so they even deduct 25 % from my bill amount.

Shiv prakash

000

87 Points Joined March 2012

Lakshman ji... (i) Service Tax Applicbiulity and (ii) Payment of service tax is two diffrent things.

the Notificatoin ( 30-2012-ST ) you are mentioning is for who is responsible for payment of Service Tax ( IF APPLICABLE )

So first Question is wheather Service Tax is applicable....?

and your doubt is right it not applicable in your case ( becouse Gross receipt is less than 10 Lack ) .

Lakshman

Director

30 Points Joined March 2015

Dear shiva,

I am from consulting firm and i do place candidates as per the client reqirements and i do raise a bill off 8.33 % of the candidate CTC if gets placed. Now i am not crossing the limit every year .( turnover is not crossing the limits then surely Service Tax is not applicable. And now Service tax limit is extented to 15 Lakhs .)

Note : If the aggregate value does not exceed the limit in that Financial year , then the Service Provider need not pay any service tax. Only if that Limit exceeds, he should apply for service tax number and charge the service tax to the customers he is servicing.

But here my client or the service receiver says they are Pvt Ltd company and so they have necessity to pay service tax for my bill amount if it is applicable or not. So he is deducting 25% from my bill amount which ever i raise.

I want to know without service tax number how can the service receiver deduct the service tax. And only if it is applicable they have to see in which clause the service provided comes and accordingly they have to pay the service tax to the service provider and then the service provider should get the payment from the service receiver and then

pay to the government through his service tax number. Right ?

Shiv prakash

000

87 Points Joined March 2012

First there is increase in service tax limit it is still 10 lakhs.

for Service of Supply of Manpower from 1/03/2015 Whole Service tax is paid by the Service Receiver ( 100%)

Notification No. 07/2015-ST dt. 01-03-2015

So now you Don't have register if Gross Receipt is less than 9 Lakhs.

Assuming your Quires is for befor 1/03/2015

Your claint is paying the Service Tax for his portion (75%) he will register himself, you don't need to register for that if your Gross Receipt is less than 9 lakhs.

if claint is deducting 25% extra from your fess then its your persnal matter.

your claint (Service receiver) don't have to pay service tax to you (Service provider) , they have deposit it directly to GOV. using there own Registration No.

CA Kalpesh Patel

180 Points Joined February 2010

Hi friend think out of all this that it is the case if Reverse charge Mechanisum as ur client is Pvt Ltd co. So it falls under RCM and have to pay service tax on 25% portion of ur bill and as the resposibility to pay service tax is on service rexeiver and not on service provider and so they deduct that charges from ur bill. That what I m thinking.. let other expert view...