Service tax liability under reverse charge mechanism

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Abhay

Accoutnant

28 Points Posted on 03 January 2013

Dear

We are receiving bill from Manpower supply agency. They are charging service tax on 100% value of their charges.

My questions are as per below:

1. As per service tax reverse charge mechanism should we are still lible to pay Service Tax on 75% of bill value.

2. For other services of reverse charge also if provider charge service tax on 100% value, then we will be libale or not for receiver portion.

3. In case of man power supply if receiptent is not a company but the provider is individual, reverse charge mechanism will apply or not.

Thanks

Abhay

Replies (2)

Madhukar N Hiregange

Chartered Accountant

33545 Points Posted on 04 January 2013

If liable under reverse charge you would be liable on 75%, even where the SP has charged full. You may pay him only 25% and ask him only to charge 25% in future.

You wouldbeeligible for the credit on amount paid by him and yourslef.

If you are also not liable [ individual etc] then youneed not pay on reverse charge and the SP has to charge on gross amount. However it is not your responsibility if SP does not pay or pays only on 25%.

Abhay

Accoutnant

28 Points Posted on 04 January 2013

Dear Sir

One more query if goods transport agecy by road if charges service tax to us on 25% value, we are still liable to pay serice tax on 25% value of freight amount or not. Please also advise meaning of business entity for reverse charge mechanism in Manpower supply agency. We are propriteorship Firm, it will applicable on us or not.

Originally posted by : Madhukar N Hiregange

If liable under reverse charge you would be liable on 75%, even where the SP has charged full. You may pay him only 25% and ask him only to charge 25% in future.

You wouldbeeligible for the credit on amount paid by him and yourslef.

If you are also not liable [ individual etc] then youneed not pay on reverse charge and the SP has to charge on gross amount. However it is not your responsibility if SP does not pay or pays only on 25%.