Reverse Charge is paid by the service receiver. With effect from 01-07-2012, some more service categories have been included under Reverse Charge. Under this approach, for the payment of service tax, service receiver cannot claim the general exemption of 10 lakhs.
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Reverse charge on service provided
Reverse charge on services received
Record partial Reverse Charge on purchases and make payment
For example, Raksha Security Agency sold Security Services to ABC Company on 20.12.2012 for Rs. 1,00,000. Raksha Security Agency is liable to pay Service Tax to the extent of only 25% and so raises an Invoice accordingly. ABC Company is liable to pay the remaining 75% of the Service Tax to the Department.
To record Reverse Charge of Service Tax, the following actions are required.
1. For the Service Provider ledger: Enable the option Set/alter service tax details and provide the service tax details.
2. For the Service ledger: Select the Service category (created from Accounts Info. > Statutory Info. > Service Categories > Create > press Ctrl + C and enter the service tax and reverse charge details).
3. Sale of Services Classified under Reverse Charge: Record a Sales Voucher for sale with services classified under Reverse Charge .
4. Payment of Tax to the Government: Record a payment for paying 25% of tax amount.
For example, ABC Company purchased Security Services from Raksha Security Agency on 20.12.2012 for Rs. 1,00,000. Raksha Security Agency is liable to pay Service Tax to the extent of only 25% and so raises an Invoice accordingly. ABC Company is liable to pay the remaining 75% of the Service Tax to the Department.
To record Reverse Charge of Service Tax, the following actions are required.
1. For the Service Provider ledger: Enable the option Set/alter service tax details and provide the service tax details.
2. For the Service ledger: Select the Service category (created from Accounts Info. > Statutory Info. > Service Categories > Create > press Ctrl + C and enter the service tax and reverse charge details).
3. Purchase of Services Classified under Reverse Charge: Record a Purchase Voucher for purchase with services classified under Reverse Charge .
4. Payment to the Service Provider: Record a Payment Voucher.
5. To raise Service Tax liability: Record a Journal Voucher, with Tax on Reverse Charge as the nature of adjustment if you want to maintain it in your books. this is only for book keeping purposes.
6. Payment of Tax to the Government: Record a Payment Voucher for paying 75% of the tax. To avail credit select Recipient Liability . For normal payment select Regular .
Under this scheme new services with partial reverse charges are introduced. Where the service provider and receiver are liable to pay Service Tax in a prescribed ratio.
|
Description of Services |
% of Service Tax payable by the Service Provider |
% of Service Tax payable by the Service Receiver |
|
Transportation of goods by road |
Nil |
100% |
|
Sponsorship Services |
Nil |
100% |
|
Supply of manpower or security agencies |
25% |
75% |
|
Works Contract |
50% |
50% |
On 17-06-2016, ABC Company received services from Vibha Security Agency for Rs. 1,54,635. While raising the invoice service Provider has charged Service Tax on 25% of the Services. On 75% of the assessable value, ABC Company has to calculate Service Tax payable to the government.
To enable reverse charge
● Go to F11: Features > Statutory & Taxation.
o Set Define Service Category and tax details as masters? to Yes .
o Set Is Reverse Charge Applicable? to Yes .
The reverse charge details can be defined in the Service Category Master .
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase > Accounting Invoice .
2. Enter the Supplier Invoice No.
3. Enter the Date for invoice.
4. Select Vibha Security Agency in the field Party's A/c Name .
5. Select the purchase ledger under Particulars .
6. Enter 2,00,000 in the field Amount .
7. Select service tax, Swachh Bharat cess and Krishi Kalyan cess ledgers. The values are automatically calculated and displayed.
8. Click A : Tax Analysis . Click F1 : Detailed to view the service tax details.
9. Press Esc to return to purchase invoice.
10. Enter Narration , if required. The purchase invoice appears as shown below:
11. Press Enter to save.
1. Go to Gateway of Tally > Display > Statutory Reports > Service Tax Reports > Form ST3 .
2. Select the company from the List of Tax Units .
3. Go to Service Tax Payable - Receiver's Liability .
4. Click S : Stat Payment .
5. Select Service Tax as Tax Type .
6. Define the Period from and To .
7. Select Receipt Liability as Payment Type .
8. Press Enter to return to voucher.
9. Enter the amount for service tax, swachh bharat cess and krishi kalyan cess manually.
10. Press Enter the save.
