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