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TMI BlogSERVICE TAX liabilityX X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Reply By JAMES PG - The Reply = Wherever ST on reverse charge is applicable, Service provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 - Reply By Pradeep Khatri - The Reply = Service tax invoice should be issued according to the requirement of the New Notificaion No. 15/2012-ST . - Reply By krishna murthy - The Reply = The notification number given by mr. pradeep khatri is rescinded vide new notification number notification no 30/2012 , dated 20th June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Reply By JAMES PG - The Reply = 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - Reply By krishna murthy - The Reply = 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emitting 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. - Reply By RAJESH MANGAL AGRAWAL - The Reply = 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - Reply By Lohith H P - The Reply = 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 - Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly By RAJ KUMAR RAJKUMAR - The Reply = 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 515/- (50000+1545)*1% to Vendor Account 51030/- so you claim the input of Rs. 6180. - Reply By Lohith H P - The Reply = Thanks for information - SERVICE TAX liability - Query Started By: - SAI SURENDRA SAI SURENDRA Dated:- 13-7-2012 Service Tax - Got 9 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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