Service tax on works contract

Service Tax (Legacy) 526 views 5 replies

aishwarya s raghavan

student

224 Points Posted on 18 January 2013

Dear All! I need some clarification on the following area. A ltd co receives an erection service from B, an individual who is exempted under service tax, being an SEZ unit,. Therefore, B has not charged service tax in his invoice. Is A ltd liable to pay 50% of the invoice amount as service tax under reverse charge mechanism to the govt? If so paid, are they eligible to avail credit of the amount so paid? Thanks in advance! Please clarify

Replies (5)

V Vara Prasad

Chartered Accountant

212 Points Posted on 18 January 2013

Yes Service receiver is liable to pay service tax irrespective of service provider liability

He can avail the credit that he paid under reverse charge mechanism

PARMITA MAZUMDER

CA- Practice

386 Points Posted on 18 January 2013

Service tax is applicable on taxable services provided by SEZ units, except such services which are exempt by notification No. 4/2004-ST. The Ministry of Finance vide Circular No. 105/08/2008 dt 16.09.2008 has confirmed the same.

If erection services are works contract then 50% liability you have to discharge.

aishwarya s raghavan

student

224 Points Posted on 18 January 2013

Is taxable services rendered by an SEZ unit, to a non SEZ unit taxable? Should they raise service tax in their invoice?

PARMITA MAZUMDER

CA- Practice

386 Points Posted on 18 January 2013

Yes they are liable for service tax.

V Vara Prasad

Chartered Accountant

212 Points Posted on 18 January 2013

I too got a doubt

Actually as per SEZ Act taxable services provided by SEZ are taxable in the hands of service receiver only

Please go through this below link

https://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=7900

And one more doubt to me

As per reverse charge mechanism service receiver is also liable to pay service tax in some cases

If services related to reverse charge mechanism are provided inside India then serive receiver is liable to pay the full amount of service tax or to his portion only