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Effects of Full Reverse Charge under Service Tax Return July-Sept 2012

by on April 14, 2013

Return filing due date of Service Tax Return July-Sept 2012 is extended to 30th April 2012, giving us an extra time to understand the return better and comply it more meaningfully.

Like we have discussed earlier the effects of partial reverse charge under Service Tax Return July-Sept 2012, this article will explain in detail effects of full reverse charge under Service Tax Return July-Sept 2012.

While providing these guidelines, it is assumed that the necessary technical advice (e.g. classification, valuation or rate of service) has been availed by user from the consultant or appointed Chartered Accountant. We suggest referring our detail article on reverse charge applicability by clicking on following link:

http://aviratshiksha.wordpress.com/2012/12/06/reverse-charge-mechanism-under-service-tax-from-01-07-2012/

For better understanding, we have created a hypothetical example as follows:

Company X (Pvt. Ltd.) is receiving services of Goods Transport Services from Y, a partnership firm (with turnover less than 50 lakh). In this situation, Y has raised an invoice of Rs. 10,000/- for services provided for July month with no service tax. Company paid the said bill in full in the month of August and booked service tax liability of Rs. 309/- (25% of 10,000*12.36%) under full reverse charge service tax head after taking abatement of 75% of value under Notification No. 26/2012. Company deposited the service tax of Rs. 309/- in government account on 4th of Sept 2012.

How shall X treat these transactions in its service tax returns for July-Sept 12?

It is good to understand that the service tax return has been designed in a way bifurcating into different parts for better understanding of users. The parts range from A to L. In this article, these parts are mentioned on each and every step for easy picking.

In the Service Tax return of X (Service Receiver):

Follow the following steps to enter details in service tax return of X:

Step 1: Selecting the company and service details

  • Under the return sheet, enter the registration number in A2.
  • Select constitution of company X in A8 as “Registered Private Limited Company”. The utility will ask to confirm the constitution. Click “Yes” and data will be freeze and macros will work.
  • Select Taxable service as “Transport of Goods by Road/goods transport agency service” in A9. The utility will ask to confirm the nature of service. Click “Yes” and data will be freeze and macros will work.

Step 2: Selecting details of full reverse charge applicability

  • Under the Payable-Service (1) sheet, select “No” in A10.1 because the service is chargeable under Section 68(2) – reverse charge.
  • Select “Yes” in A10.2 as X is service receiver under Section 68(2) – reverse charge.
  • Let remain “No” in A10.4 as X is service receiver under Section 68(2) – full reverse charge and not partial reverse charge.

Step 3: Selecting Abatement notifications

  • Select “Yes” in A12.1.
  • Select “026/2012-S.T.” as Notification No. in A12.2 and “7” as serial number.

At the close of step 3 the final picture will look like following picture -

1

Please click on any image to see enlarged view.

Step 4: Entering values of services and calculation of tax

  • Navigate to B2, enter values of Rs. 10,000/- in B2.1 under the column of August month.

It seems here that only payment made is required to be entered in B2.1 and not the bill values. In our case full amount has been paid but if partial payment is made (e.g. 6,000/-) then only payment made is required to be entered.

  • Enter Rs. 7,500/- (10,000/-*75%) in B2.11 as amount paid for exempted services received or to be received.

This entry will be permitted only if Step 2 is followed above.

  • Enter the rates 12%, 2% & 1% in B2.15 and enter Rs. 2,500/- (10,000/-*25%) in August Taxable Values.

At the close of step 4 the final picture will look like following picture -

2

The Excel utility will automatically take the service tax and cess figures.

The rest of the return data (e.g. payment, challan, CENVAT etc.) is required to be completed like normal return data.

Happy return filing!

CA GAUTAM JOSHI

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7 Comments
  1. Please can you help me –
    Rent a cab is the service…under 100% reverse charge..then the service provider who is an individual…does he have to file the return? If yes, how to show the amounts which are under this 100 % reverse charge..

    • Dear Avanti,

      Problem you have is the problem everyone facing. There are no clarifications in this regard and if ACES help desk is contacted then they request us to refer to local superintendent.

      However, we believe we shall show values on which we have not paid service tax and in fact paid by service receivers (corporate).

      You have chosen to take abatement and follow option 7(a) of Notification No. 30/2012-S.T. wherein you will not charge or pay any service tax and service receiver will pay service tax. Following steps are designed in such way:

      Following steps are required to be followed:

      1. Step-1 will remain same as given in the article.
      2. Step-2 Select “Yes” in A10.1, “No” in A10.2 and “Yes” in A10.3 (because it is a partial reverse charge). Select “40” in A10.5.
      Remember we don’t have to pay 40% of values because we are availing abatement and hence service receiver will pay service tax liability; showing “40” here is only for disclosure purpose.
      3. Step-3 Select “Yes” in A11.1, Select “030/2012-S.T.” as Notification No. in A12.2 and “7(a)” as serial number.
      4. Step-4 Navigate to B1.6, enter values on which service receivers have paid tax. Here you have to enter total full values charged to clients. Enter the same values in B1.9 showing them as exemptions. By this way, total taxable values will automatically come as nil in B1.14 and you can also disclose values on which service receivers have paid service tax.

      The rest of the return data (e.g. payment, challan, CENVAT etc.) is required to be completed like normal return data.

      This is not the best or most correct way of doing it but because of the Excel utility limitations, we have followed this way.

      Best Wishes.

  2. Dear Sir,

    We are given Services under Repairs & Maint. (without Transfer of Property/Goods)
    and against this We received 100% tax from Service Receiver…

    But We also provided in d same cat…withTransfer of Goods…then in Return…of present..
    against this transfer of goods..we received 50% ServiceTax frm SR(Service Receiver)

    How to fill/show these two type of “COLLETED TAXES & PAID”…

    Requesting for clarification

    Rgds,

    Suresh

    • Dear Suresh,

      1. For service tax collected @100%

      If you have collected 1005 service tax by mistake then you have to deposit 100% of service tax to government. This is because you can’t pocket service tax collected from customers.

      Return is only reflection of activities undertaken by you and hence you have to show 100% service tax only in the return.

      2. For service tax collected @50%

      This is to be shown under partial reverse charge head. As a service provider show notification No. 24/2012 under abatement (Sr. No. 1) and No. 30/2012 (Sr. No. 9) under exemption, insert the values under B1.6, and take appropriate exemption (50% as a service provider) and relevant abatement values (i.e. 30/40/60). Service tax rate shall be 12% unique for both the cases.

      Best Wishes.

  3. Dear Sir,

    We are received 50% Service Tax from Service Receiver..against Works Contract nature of Services..and We are delayed in payment of Tax at due date…Then We have to pay interest on which received service tax amt. (OR) what is total service Tax(100%) ..on this to pay interest..

    Requested for Clarify this

    Regards,

    Suresh

  4. Manish Prasad permalink

    Dear Sir,

    I have to file Service Tax return for the period of April to Sept 2013.I Have Some problems while filling ST-3 Form.
    My service Tax Payable for the Month of April is Rs 1536 & for May to August is Rs.0 and for the month of Sept 2013 is Rs.2360.And i have made payment of service tax by using Single Challan on 25th of Nov.Rs.4000,.
    I want to know How to Bifurcate & display it in ST-3 return.and in which column same should be shown .

    Please help..

    Thanks & regards

    Manish Prasad

    • Hi Manish,

      Challan details needs to be entered month wise. Hence, first select April, enter the CIN number and Rs. 1536/- as amount. Again select September month, enter the CIN number and Rs. 2360/- as amount. Have you paid balance of Rs. 104/- as interest? If yes, then add the same amount in the row in the month for which it is paid say if it is paid for delay of ST of Sept month then add in the Sept row and the total amount you need to enter would be Rs. 2,464/- (Rs. 2,360/- + Rs. 104/-).

      Best Wishes.

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