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Service tax liability

Suvajit Mandal (MBA) (24 Points)

07 August 2013  

Dear Sir,

I am a Manpower Consulting Firm, Propreitor in nature. 

I am raising invoice to my clients aginst manpower services provided. As i understand, under the Reverse Charge Amednment Act 2012 for Service Tax, my ST Liability is 25% of the Bill Value @ 12.36% while rest 75% of the Bill Value at 12.36% is liability for the client)service receiver). So if I am raising invoice of INR 100,000, then @ 12.36%, ST is INR 12,360. In this Service Provider Liability is INR 3,090 and Service Receiver is INR 9,270. 

My first question is, is this calculation correct. If so, am i liabile to raise the INR 9,270 from Service Receiver in form of Service Tax, or the Service Receiver can choose to pay the ST directly to the government. If so, in that case I will file only INR 3,090 as ST from my ST Returns. Is that correct.

If the above is correct, then do i need to collec any such document like some kind of certificate from the Service Receiver as a proof that Service Receiver has agreed to pay the remaining liability on behalf of me. 

Also, if the Service Receiver doesnot pay the ST to Govt. is there a recourse for the Govt to me(service provider).

Pls advice.

 1 Replies

Shobhit Goel (Chartered Accountant) (101 Points)
Replied 07 August 2013

Dear Suvajit,

Reverse Charge is applicable only when you as a proprietor providing Supply of Manpower Service to Companies registered under COmpanies Act, 1956 and then you will be liable to pay 25% service tax and Service Receiver will be liable to pay 75% service tax.


Invoice shall be issued as below:

Service Amount = 100,000/-

Service Tax (25% of 12.36% i.e. 3.09%) = 100,000 * 3.09% = 3090

Total Invoice Amount = 103,090/-

And, if Service Receiver do not pay his part (i.e. 75%) to government, then there would be no default at your part. It is service receiver duty/liability to pay to government. You just please charge at 3.09% in your invoice.




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