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Service tax under reverse charge for partnership firm

Swaroopa (Articled Assistant since Aug 2011) (69 Points)

20 December 2013

Please tell me whether Service Tax under Reverse Charge Mechanism is applicable to the Freight charges incurred by the Partnership Firm on the goods purchased by them???

Firm is not regisered under service tax.

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14 Replies

CA and CMA Ravinder Singh (CA and CMA) (853 Points)
Replied 20 December 2013

It is applicable on firms...... Registration is not a condition to become liable to service tax under reverse charge..

1 Like

Swaroopa (Articled Assistant since Aug 2011) (69 Points)
Replied 20 December 2013

Ok. But whether Service Tax on reverse charge is applicable for freight charges charged by the supplier on purchase bills???

1 Like

Neljo Davis ACA (Consultant) (630 Points)
Replied 20 December 2013

The person who pays frieght charges to GTA is liable for reverse charge. If the partnership firm pays bill amount including frieght charges to the supplier, partnership firm will not be liable pay service tax under reverse charge mechanism.

2 Like

Swaroopa (Articled Assistant since Aug 2011) (69 Points)
Replied 20 December 2013

Thanks a lot sir...

Swaroopa (Articled Assistant since Aug 2011) (69 Points)
Replied 20 December 2013

Ok means service tax under the reverse charge mechanism will be applicable on the freight charges incurred by the firm for supplying their goods to their clients right...

yogesh khandbahale (Article Assistant) (64 Points)
Replied 20 December 2013

thanx a lot sir for valuable information........

Now my 1st Question is that, what will happen in same case of Pvt. Ltd. company..????

& 2nd one is - Can Pvt. Ltd. Company take credit of service tax against excise in GTA...??????

1 Like

CA. Kuldeep Singhi (Entrepreneur) (424 Points)
Replied 21 December 2013

Same as have happened to firm. Pvt. Ltd. Co. can take credit of GTA

1 Like

kumar hattanna (Officer - Excise) (525 Points)
Replied 21 December 2013

In case of Pvt company 100% service tax need to be pay by pvt company under RCM.

and same can be eligible for cenvat credit.

Regards

Kumar

1 Like

Prabhat Kumar (Advocate & Consultant) (1912 Points)
Replied 21 December 2013

If GTA service is provided to A factory,society, co-operative,dealer of Excise,body corporate or toa PARTNERSHIP FIRM whether regitered or unregistered,under RCM there 100% liability of the service recepient.So,in your case it is your liability to pay Servie tax being recepient of the service.[Notification no.30/2012S.T dated 20.6.2012.]

1 Like

yogesh khandbahale (Article Assistant) (64 Points)
Replied 21 December 2013

thanxx All.......

As per my knowledge & information, In GTA Input service tax credit Allowed But Output Service tax credit Allowed or not.....???? And If it is Allowed then how ???

Swaroopa (Articled Assistant since Aug 2011) (69 Points)
Replied 21 December 2013

if amount of freight paid by partnership firm is Rs.1000 then service tax under reverse charge mechanism will be @ 12.36% on Rs.1000/- i.e Rs.123.6/- right????

Or there is some abatement???

Neljo Davis ACA (Consultant) (630 Points)
Replied 23 December 2013

Notification No.26/2012 dated 20/06/2012 has allowed abatement of 75% on GTA subject to the condition that the CENVAT credit on inputs, capital goods and input services has not been taken by GTA. So the effective rate will be 3.09%. (i.e Rs.30.9/- in the above case) This abatement is available to service provider as well as service receiver paying tax under reverse charge mechanism. Service receiver has to obtain declaration/certificate from GTA stating CENVAT Credit is not taken.

Lalit Ailawadi (Accountant) (28 Points)
Replied 23 August 2016

I have a Partnership firm ( Regd Under Service Tax Act ) please tell me whether I have to Pay Service Tax under Reverse Charge mechanism on the Services of Transporter & Work Contract .. ( The are not Registered under service Tax Act )

Please let me Know.