Service tax For installation

[Balamurugan R]

Dear All,

We have some Service Providers who are doing the work of Installation, Commissioning, Erection, for machinery,

- They are Individuals not having the Service tax registration

- Charging the bill in the name of Commissioning, Rewinding works like that and the amount of the work

-This was an first time installation works for machinery and we have booked in the asset account

For the above points shall we need to pay the service tax on behalf of the vendor, (If yes pls provide clarification on which head to be paid and the percentage)

Kindly suggest,,

Read more at: http://www.caclubindia.com/#

AI Summary

Reverse charge liability applies where an unregistered individual provider supplies installation services, shifting tax payment to recipient.
Where installation, commissioning or erection is limited to pure labour supplied by an individual/HUF/firm and materials are provided by the recipient, the supplier bears service tax. If the provider supplies materials or the activity constitutes a works contract service, reverse charge can make the recipient (especially if a body corporate) liable to pay tax on the notified portion. Clear invoice descriptions distinguishing labour and materials, correct accounting classification for works contract service, and application of the notified receiver-share rules are key compliance steps.