Service Tax Payment even if the service provider is exempted.

[Guest]

It is said that if the turn over of the service provider is less than 10 Lacs then he is exempted from service tax but same is not true for the service receiver. Then how service receiver will be convinced that his service provider has paid the right amount of the service tax because by the service receiver, service tax is paid extra at actuals after the submission of the documentry proof by the service provider?

 

-Regards,

Saurabh

[vasudevan unnikrishnan]

Once the service provider is within the threshold exemption,there is no liability to be shared by the receiver.In the reverse charge method,first the quantum of tax is to be worked out in the invoice and then the same is to be shown with the split of 'paid by SP'(service provider) and balance to be paid by the SR(service Receiver).Thus ,in the instant case tax payable is NIL within 10 lakhs.and thus nothing is to be paid by the receiver.Moreover,as per notification no 30/2012-ST,,sharing is applicable only when the service is provided to body corporate;no sharing when both SP and SR are body corporates or both are non body corporates.

vunnikrishnan,

email:[email protected]

[Harsh Jindal]

Mr. Saurabh, service receiver have to pay the tax on reverse charge basis except some cases. There is no issue regarding threshold limit of service provider.

[sanjay bulakh]

“The liability of the service provider and service recipient are different and independent of each other. Thus, in case the service provider is availing exemption owing to turnover being less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient shall have to pay service tax which he is required to pay under the partial reverse charge mechanism.”

Sanjay Bulakh

email- [email protected]

AI Summary

Reverse charge obliges the service recipient to pay tax despite the provider's threshold exemption, with limited sharing rules. Service tax under the reverse charge mechanism remains payable by the service recipient even if the provider benefits from a turnover-based threshold exemption; the recipient must compute tax on the invoice and discharge its independent obligation. Notification-based sharing rules can prescribe invoice presentation and may limit sharing to services provided to a body corporate, excluding cases where both parties are corporate or both are non-corporate.