SERVICE TAX liability

[RAJ KUMAR RAJKUMAR]

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.

AI Summary

Reverse charge mechanism: recipient bears part of service tax and must record liability and claim input credit appropriately.
Partial reverse charge requires allocation of service tax between provider and recipient; invoices must indicate total service tax payable and separately identify the provider's and recipient's shares. The recipient must record a distinct reverse charge liability on receipt of the bill, discharge it by remitting through challan, and may claim input credit/cenvat on the tax it pays, while the provider invoices its payable share and may note the recipient's obligation.