1. Works Contract Service

[CABIJENDERKUMAR BANSAL]

1. 1.      Works Contract Service

 We have taken Work contract service  from one of party. In November, 2012 month he has levied Service Tax on 33% value(after 67% abatement) @ 12.36% while reverse charge rules are applicable from 1^st July 2012.

 Service tax as per reverse charge mechanism:-

 Notification No. 24/2012 provides for abatement for Works contract, service tax on  40% of gross amount (in case of original works)

 Notification No. 30/2012 provides for reverse charge mechanism, Service Provider liability 50% and service receiver liability 50%

 A. Should we deposit service tax as per reverse charge mechanism and debit the party for extra service tax charged ? and if no then why no, while govt. has made liable the company which is receiving service?

 B. Further we have made advance payment for work contract. Should we deposit service tax on advance payment as, Rule 7 of POT, For reverse charge POT will be Date of Payment except payment is not made within 6 months.

1. C.  Should we show in service tax return as per date of payment as it is POT?

[YAGAY andSUN]

If the services are being provided to you by LLP, Individual Firm, HUF, Association of Person, then, you are liable to pay the service tax under Partial Reverse Charge Mechanism, otherwise not.

AI Summary

Clarification on Service Tax for Works Contracts: Partial Reverse Charge Mechanism and Reporting Rules Explained. A query was raised regarding the application of service tax on works contract services under the reverse charge mechanism. The inquirer noted that a service provider levied service tax on 33% of the value after a 67% abatement, while reverse charge rules, effective from July 2012, require a different approach. The rules specify that service tax should be applied to 40% of the gross amount for original works, with liability split equally between the service provider and receiver. Questions were asked about depositing tax on advance payments and reporting in service tax returns. The response clarified that liability under the Partial Reverse Charge Mechanism depends on the service provider's business structure.