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ANUP KUMAR MAHATO (ca)     07 December 2012

Tds on service tax portion under reverse charge

WHETHER  TAX IS DEDUCTIBLE FROM 100% OF SERVICE TAX OR ONLY ON SERVICE TAX BILLED FOR??

EXAMPLE: MANPOWER AGENCY'S BILL: RS 100.00/-

                    SERVICE TAX IN BILL (25%)  :RS.     3.09/-

                    BILLED AMOUNT                     :RS  103.09/-

PAYABLE BY SERVICE RECIPIENT(75%):RS     9.27/-

IF MANPOWER AGENCY IN AN INDIVIDUAL, TDS @ 1% (PAYMENT INCLUDING SERVICE TAX)

THEN WHAT WILL BE TDS AMOUNT ???

TDS=1%(103.09) OR 1%(112.36), PLZ LET ME KNOW AS EARLY AS POSSIBLE...



 4 Replies

CA Pintu Mishra

CA Pintu Mishra (Chartered Accountant- Industry)     07 December 2012

Tds will be deducted on amount payable to the vendor. here 100% bill amount plus 3.09% service tax total 103.09% and tds will be deducted on 103.09% value not on 112.36% value.on  1 lac total bill amount incl service tax will be 103090 and tds will be decucted Rs 1031/-. And as per new norms 75% of remaining st will be paid by service receiver for that he is not going to pay you anything he will get cenvat of this later after payment hence no need to deduct tds on this from you.

Naveen Kumar

Naveen Kumar (Chartered Accountant)     20 December 2012

What if bill is 10000 + ST 1236 = Rs. 11236 raised by Manpower Supply (Individual) to the Company.

 

and SR will discharge (75%) Rs. 927 as  reverse charges by its own.

 

Whether in this case TDS will deducted on Rs. 10,309/- or Rs. 11,236/-. 

CA Ratnesh Dutta

CA Ratnesh Dutta (Chartered Accountant)     05 July 2013

Originally posted by : Naveen Kumar

What if bill is 10000 + ST 1236 = Rs. 11236 raised by Manpower Supply (Individual) to the Company.

 

and SR will discharge (75%) Rs. 927 as  reverse charges by its own.

 

Whether in this case TDS will deducted on Rs. 10,309/- or Rs. 11,236/-. 

Mr Naveen,

 

Service tax Under reverse charge is  liability on Service recipient. Even if Service provider is charging service tax on his invoice that would not release the liability on service recipient. Service recipient would still have to discharge his liability.

Section 194C/J attracts on ANY SUM PAID or CREDITED to the vendor's/contractor's account.

If Service tax is payable to SP(service provider) then only TDS is to be deducted. But under Reverse Charge Mechanism, service tax liability is on service receiver and hence, service tax is payable to Govt not to SP. Therefore, neither service tax(reverse charge) is paid nor it is credited to Service provider's account. Hence, TDS is not deductible on such service Tax.

 

Example.

Invoice (XYZ & Associates)

Manpower Services          Rs. 1000

Service tax                        Rs. 123.6

Total Bill                             Rs. 1123.6

 

Entry:

Manpower charges..............................Dr.  1000

Service Tax Input..................................Dr.  30.9

Service Tax Input(Reverse charge).....Dr.  92.7

   To TDS payable(194C)..............                      20.62    (1000+30.9)*2%

   To Service tax payable.............                       92.7

   To  XYZ & Associates                                     1010.28    

 

I hope this might clear the issue.

RITEN KUMAR PRUSTY

RITEN KUMAR PRUSTY (CMA)     24 July 2017

Hi

Please share accounting entry in both books.


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