Reverse charge mechanism 50-50

[Ramesh M]

As per Service tax Reverse charge mech. in works contract act, we are service provider, as per rule Service Provider to pay 50% and service reciver has to pay 50%, my doubt is, who will avail the credit  on 50% paid by service provider. Service Provider or Service Receiver. 

 

Kindly suggest

[Harsh Jindal]

You will avail the credit on 50% paid by you and service receiver will avail the credit of 50% paid by him.

[YAGAY andSUN]

Although, tax on balance 50% will be paid by the service provider but it will charged from you by the service provider at the time of raising the Invoice/Bill (as the case may be).  Since it would be paid by you, whether directly or indirectly, you may avail the CENVAT credit on such services after following the provisions of CCR, 2004 as amended time to time.

AI Summary

Reverse charge mechanism shared liability: service provider and recipient each bear tax and may claim CENVAT credit accordingly. Reverse charge mechanism in works contract services allocates tax liability on a shared basis; each party may claim input credit on the tax it bears. If the provider pays a portion of tax but charges it to the recipient via invoice, the recipient, having borne the tax directly or indirectly, may claim CENVAT credit subject to compliance with Centralised CENVAT Credit Rules and admissibility conditions.