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Service tax reverse charge

maharaj (accountant) (165 Points)

12 June 2014

Dear Experts

I have one client and raised a Bill to him on Actual Basis with 12.36% service tax separately in Invoice against Labour Charges. Now they told me they will pay 50% direct to Government and 50% will pay me with the Bill amount. I have no works contract registration and newly register with servce tax other than 119 servce. My client belongs to proprietorship business.

Please support me for next course of action. Should I amend service tax registration right now as works contract? What % should I charge service tax in Bill . Already two bill generated to them and please told me have any problem at the time of service tax payment option and return file.

This is my first time query in CA club.

Advance thanks to all Expert and Gentle man.

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7 Replies

Gangatharan (Partner) (108 Points)
Replied 12 June 2014

Since you are a individual person, ST RCM will not applicable for you. ST RCM is applicable only for companies. So whatever uou did is correct. You follow as your way and explain about it to your contractor that you are a individual not a company..

1 Like

KIYOSH (TAX CONSULTANT) (332 Points)
Replied 12 June 2014

agreed with Mr. Gangatharan

maharaj (accountant) (165 Points)
Replied 16 June 2014

Thanks kindly convey the notification is available to your end. My contractor(service receiver) is LTD company and I am Individual (propprietorship business). So they can't pay me in RCM rule as 50% basis as because I am Individual. Is this correct?

Please confirm. Its urgent.

Ton of thanks.

Venkatanarayana GM (Partner associate at Hiregange & Associates) (1279 Points)
Replied 16 June 2014

your saying you have raised that bill aganist labour charges then, if that is the case there is no question of RCM.

please refer Notification No 30/2012 ST Reverse charge is applicable only for Rent a cab, Legal services, manpower supply service , security service, GTA, Director remuneration paid as consultant or professional fee and Works contract and some other

So in your case be clear about the service what your providing. if at all if it is Works contract service then you have to charge him only 50% balance 50% he will pay himself.

maharaj (accountant) (165 Points)
Replied 18 June 2014

Thanks Mr. venkat. Actually more or less I had worked with this LTD compnay only labour charges basis and its yearly comes to 4 to 5 laks yearly. Now they few months back told me I have to give them ST number other wise no bill will be accepted, that's why I have registered in ST other than 119 services code that is 120 code. Now this month I have raised a two bills on actual basis as 12.36%.

Now they told me that 50% of ST will be paid by them directly to the government and 50% will be paid by them with Bill. Here is my doubt in what process I have paid ST in GAR7 challan. Also if there is problem arise at the time of ST return file . I belongs to proprietorship business.

Plz short out the problem.

Venkatanarayana GM (Partner associate at Hiregange & Associates) (1279 Points)
Replied 28 June 2014

Kindly share your Mobile Number, I will sort out the problem.

Becasue i have to ascertain the facts correctly.

Your saying, your raising bill against labour charges , in that case there is no Reverse charge applicable to you.

Further, Your turnover also seems to be withing the small scale service provider limit.

CA Vivek Goyal (Practising CA) (148 Points)
Replied 28 June 2014

Dear Maharaj,

Professional service is covered under pure service. Hence you are required to charge ST @ 12.36% flat to your client. You tell to your client that you are not a work contactor so RCM is not applicable on your services. He will have to pay flat service tax to you.