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“ Partial Reverse Charge under New Tax regime ”

 

Services Covered

 

 

% liability of

Nature of Person located in taxable territory

Description of service provided

Service Provider

Service Receiver

Service Provider

Service Receiver

Renting/hiring any passenger motor vehicle to any person not in similar business line

0%

100%

Individual/HUF/Partnership/ AOP

Corporate business entity

(a) On abated value

0%

100%

-do-

-do-

(b) Non abated value.

50%

50%

-do-

-do-

Supply of manpower or Security Service

{till 31-Mar-15: 25%/75%}

0%

100%

-do-

-do-

Service Portion of Works contract

50%

50%

-do-

-do-

 

Invoicing

 

Service Provider to indicate following on invoice as per Rule 4A of STR

·       Name, address and registration no. of Service Provider

·       Name and address of Service receiver(customer)

·       Value of taxable service

·       Service tax “payable” on the same

 

Example

Nature of Service

Works Contract

Value of Work Done

100,000

Sale of Material

 

70,000

 

Service/ Labour

 

30,000

 

a) Computation of Service Tax

 

Service tax(incl. cess)

14.00%

4,200

 

Liability of Service Provider (recoverable)

50%

2,100

2,100

Liability of Service Receiver

50%

2,100

 

b) Computation of Sales Tax

13%

9100

Amount recoverable from Customer

111,200

 

 

Threshold exemption

 

·       Service receiver: No benefit

·       Service provider; Can avail benefit of 10 lacs exemption

 

Cenvat Credit

 

Cenvat credit to service receiver (customer) is allowed subject to conditions specified in Cenvat Credit Rules, 2004 of:

·       Tax paid to service provider on the basis of invoice

·       Tax paid by receiver on the basis of challan

 

Point of Taxation

 

Point of taxation will determine the due date for payment of tax both for service receiver and provider.

Service Provider: POT generally one of the following, whichever is earlier:

·       Date of invoice

·       Receipt of Payment

Service Recipient: Date of payment of invoice

 

Computation method

 

·       TRU  has clarified that both, service receiver and service provider can have different methods to computation of tax liability

  • However Expl. II to notif. 30/2012-ST specifically provides that in works contract services, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service

 

Date of Applicability

 

·       Notification. No 30/2012-ST is applicable w.e.f. 01-Jul-2012.

·       However in case of service provided before/ invoice raised before 01-Jul-12 and payments made later, service receiver is not liable to pay tax as recipient.