Contractee’s responsibility under reverse charge (work contracts) as per amendments of Budget FY.12-13

[Asked by Guest]

 

Dear Sir,

We as a contractee going to finalized works contract for FY-12-13.

What would be our responsibility under reverse charge as a contractee?

Is any other change in service tax under the budget of FY-12-13 which should be kept in mind as a contractee?

 

Thanks

Jai

 

AI Summary

Reverse charge on works contracts now splits tax liability between provider and company recipient, changing deposit responsibilities.
Reverse charge liability applies where the service provider is a Proprietary concern, Firm, LLP or AOP and the recipient is a company, with specified proportionate allocations: renting/hiring of motor vehicles (receiver bears larger share with abatement, otherwise full receiver liability), manpower supply (majority by receiver) and works contracts (50:50 split). Valuation for works contracts is to be based on books and documents, or, if not possible, a prescribed percentage of the contract value, and tax and cesses are computed on that taxable component before apportioning deposit obligations under reverse charge.