Service tax on reverse charge mechanism

Queries 712 views 2 replies

NITESH SHARMA

articled assistant

34 Points Joined June 2014

I pay service tax under RCM for taking service of Manpower. I have a doubt regarding the point of taxation and interest on late payment. Suppose I got an invoice of Rs.22000 for the services I received for the month of April '15 and the invoice has been raised on 5.5.15 but I forgot to pass the entry in the books. The Return for the period has also been submitted and the date for filing Revised Return has also got lapsed. It came to my knowledge on 1.1.2016 and I passed the said entry on that date. Now the problem is when I am going to submit my Oct-Mar Return, should I take that entry in january month itself or is there any other treatment?? and if it will be taken in January then how will I calculate service tax for the same as it is 12.36% charged in the invoice but taking it in January make it 14.5% .And how will I calculate Interest for the same as it is due from 3 months passing the invoice date or payment date whichever is earlier as per Notification no. 7/2015. Here the payment was not made within 3 months from the date of invoice.

Please reply soon with the best possible answer.

Replies (2)

Vipul Mittal

Consultant - Indirect Tax

97 Points Joined October 2008

From the above i understand you have following two queries:

1. Payment of interest

In case of reverse charge mechanism, the point of taxation (POT) is the date of payment to vendor. However, if the payment is not made within 3 months from the date of invoice, POT shall be the date immediately succeeding the period of three months

In the present case, since the date of invoice is 5 May 2015, POT will be 6 August 2015 and due date for payment of tax will be 6 September 2015. You need to discharge interest from 6 September 2015 till date of payment of service tax.

2. Disclosure in return

Service tax payment for past period and interest paid thereon should be shown as arrears of tax, interest in Part G of the return (ST-3).

Challan for payment should be shown in Part H1. Interest should also be shown separately in Part H2.

Hope the above clarifies your queries.

NITESH SHARMA

articled assistant

34 Points Joined June 2014

Sir,

Is that interest calculated from POT date or 6th september??

Actually I have paid service tax with interest on 01/07/2016 taking date for interest calculation from 6th August. So shall I get refund for the excess interest paid if it happens so??