SERVICE TAX liability, Service Tax

[SAI SURENDRA SAI SURENDRA]

sir,

Because of the recent changes recent changes in service tax Notification w.e.f 01.7.2012.

Suppose i received a service bill claiming the service tax of 12.36%. as per the new notification service receiver has to pay the liability.

service expense Account   Debit  

ST input account                  Debit

to st liability                          Credit

TDS                                      credit

party A/c Balance.

if i pay service tax liability directly to the st dept.

this balance wont reflect in the party account. party account will show yet to recive the balance. how to adjust kindly clarify about the new notification.

Posts / Replies

[JAMES PG]

Wherever ST on reverse charge is applicable, Service provider cannot claim full 12.36% ST in the Bill. He can  claim the ST which is payable by him only and the amount to be paid by the Service receiver has to be shown separately and cannot be grossed up in the Invoice value.

An example is given below:

Manpower supply
Value	1000.00
ST payable  25% of 12.36%	30.90
Total	1030.90
ST payable  by receiver
(75% of 12.36%)	92.70

[Pradeep Khatri]

Service tax invoice should be issued according to the requirement of the New Notificaion No. 15/2012-ST.

[krishna murthy]

The notification number given by mr. pradeep khatri is rescinded vide new notification number notification no 30/2012, dated 20th June 2012.

I feel the balance 75% service tax amount should not be shown by the service provider in their bill and should make a mention that as per reverse charge mechanism, the balance 75% is payable by the service receiver.  At the time of accounting the bill a liability for 75% st amount should be created under head service tax payable under reverse charge on manpower supply for better control.

[JAMES PG]

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The observation that  "balance 75% service tax amount should not be shown by the service provider in their bill" appears to be  not correct. As per Rule 4A (iv) 1 of ST Rules, " Service Tax payable" should be shown in the Invoice. 'ST payable' would imply both payable by service provider and receiver.

This has been specifically mentioned in point no 10.1.1 of the Guidance Note No 10 of Education Guide published by CBEC, which is reproduced below:

"10.1.2 What does a service provider need to indicate on the invoice when he is liable to pay only a part of the liability under the partial reverse charge mechanism?

The service provider shall issue an invoice complying with Rule 4A of the Service Tax Rules 1994. Thus the invoice shall indicate the name, address and the registration number of the service provider; the name and address of the person receiving taxable service; the description and value of taxable service provided or agreed to be provided; and the service tax payable thereon. As per clause (iv) of sub-rule (1) of the said rule 4A "the service tax payable thereon' has to be indicated. The service tax payable would include service tax payable by the service provider.

In view of the above, it is required to indicate total service tax payable in the Invoice

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[krishna murthy]

Reference to james PG comments

The last sentence of the referred para reads as "The service tax payable would include service tax payable by the service provider.".  That means, it is very clear that the service provider should show only such service tax amount which is payable by them and not the service recipient.

In the guide, it is further mentioned that, the service recipient should calculate their liability and discharge the same by way of remitting through challan and can claim cenvat based on the same.

Similarly, in case of GTA/sponsorship no service provider calculates the amount of service tax payable on their invoice or LR, but only mention that the service tax is payable by the service recipient.

[RAJESH MANGAL AGRAWAL]

Reference to Mr Krishna Murthy Comment.

In my opinion here the service provider has to billed his portion of service tax and grossed it up.

Further he has to calculate the service tax payable by the service receiver and mentioned the same should be payable by the service recipient.

Ex. Manpower supply by an Individual to Corporate Business Entity.

Bill value                                                                      100000

Service Tax (12.36% * 25%)                                             3090

Total                                                                                103090

Service Tax to be paid by the recipient of service

(12.36%* 75%) = 9270

CA Rajesh Mangal Agrawal

[Lohith H P]

In Manpower Service , Service tax to be pay of provider s 25% and receiver is 75% as per Notification 30/2012.

I have one doubt for this  How much input ST credit taken by receiver

BCZ Provider s shows the  his invoice only 25% of 12.36% ST.

Receiver is taken only 25% ST Credit or 100% of ST.  BCZ he also pay remaining 75%.

If its not possible to taken of 75% ST,  wr its shows in tally .

Plz advise me

[RAJ KUMAR RAJKUMAR]

Dear Mr.Lohit,

 

Suppose Manpower Bill  for Rs.50000/- in that 75% portion Rs. 37500/- Service receivers liability is 12.36% =4635  and 25% Rs.12500/- Service provider responsibility is Rs.1545/-

Ask the Vendor to raise the bill with service provider responsibility i.e 50000+1545=51545/-. and the same bill  may contain the service tax part of service receiver liability as a note.

So that we can ensure that both the parties are aware their liability.

Now the entry part

Expense Account                 Rs.50000/-

Service tax Input Account          4635/-

Service tax input Acccount        1545/-

       to Service tax liability Account      4635/-

      To tds on contractor                           515/-    (50000+1545)*1%

        to Vendor Account                        51030/-

 

so you claim the input of Rs. 6180.

  

 

 

 

 

 

 

 

 

 

[Lohith H P]

Thanks for information