Reverse Charge of Service Tax

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Reverse Charge in Service Tax

Reverse Charge - Service Tax being paid by service receiver instead of Service Provider is already practiced in case of GTA transactions and Import of Services. ith effect from !"-!#-$!"$% fe& more service categories have been incl'ded 'nder Reverse Charge. (nder this approach% for the payment of Service Tax% Service receiver cannot claim the general exemption of "! la)hs. (nder this scheme ne& services &ith partial reverse charges are introd'ced. liable to pay Service Tax in prescribed ratio Example* +'ll , partial reverse charge services *escription of Services Transportation of goods by road Sponsorship Services S'pply of manpo&er or sec'rity agencies
or)s Contract

here the service provider and receiver are

, of Service Tax paya'le 'y the Service Provider =il

=il

, of Service Tax paya'le 'y the Service Receiver "!!5 "!!5 #15 1!5

$15
1!5

(sing Tally.-RP . 'sers can acco'nt all the reverse change services.
- x a mpl e * A / C C om pa n y rec ei ve d s er vi c es f rom 0 i b ha Sec ' r i ty A gen c y f or R s . " %1 2 % 3 4 1 . h i l e r ai s i n g t h e i n voi c e s e rvi c e P rovi d er h a s c h a rg ed S e rvi c e T ax on $ 1 5 o f th e S e rvi c e s . 6n # 1 5 o f th e a s s e s s a bl e v al ' e % A / C C om pa n y h a s t o c al c ' l a te S e rv i c e T ax p a ya bl e to th e gove rn m en t.

To record the above transaction ". Create the Service Provider 7edger $. Create the Service 7edger 4. Record the Transaction in 8o'rnal9P'rchase 0o'cher :to acco'nt the expenses; 2. Record the Payment 0o'cher :to acco'nt the payment; 1. Record a 8o'rnal 0o'cher :to raise Service Tax liability;

1. Create the Service Provider ledger

Go to Gateway of Tally > cco!nts "nfo. > #edgers > Create

In the #edger Creation screen* -nter the $ame of the Party 7edger e.g. Sri Road Transporters. Select S!ndry Creditors from the 7ist of Gro'ps in the %nder field. Set &aintain 'alances 'ill('y('ill to )es. -nter the *efa!lt Credit Period% if re<'ired. Set "s Service Provider+Receiver to )es.

mk:@MSITStore:D: Program!2"#i$es Ta$$%&'RP9 Ta$$%'RP9Ref&chm::(Service)Tax)*&&& 12-Mar-14

Reverse Charge of Service Tax

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Set the option Set+ lter Service Tax *etails to )es and press enter to vie& Service Tax >etails screen In Service Tax *etails screen enter
Registration $!m'er and *ate of Registration :This is not mandatory;. Type of Classification* In this field select Reverse Charge from the list of Classifications.

-nter the &ailing *etails and Tax "nformation Press Enter to accept and save.

-. Create Expenses #edger

Go to Gateway of Tally > cco!nts "nfo. > #edgers > Create

-nter the $ame of the service expense ledger yo' &ish to create% for e.g.% Sec!rity Services Select "ndirect Expenses as the gro'p name in the %nder field. Set "nventory val!es are affected to $o. Set "s Service Tax pplica'le to )es.

In *efa!lt Service Category field select Taxa'le Service from the #ist of Service Categories.
$ o t e * A s p er C i rc ' l a r = o. " 3 1 9 " 3 9 $ ! " $ - S T % &.e .f . = ove m ber $ ! % $ ! " $ % s erv i c e- s pe c i f ic a c c o' n ti n g c o de s h a ve b ee n r es to red . +or tr an s a c ti o ns re c ord ed on a n d a f te r th e $ ! th of = ov em be r% $ ! " $ % th e a p prop ri a te s e rvi c e c a te go ry h as to be c h os en . +o r mor e de ta i l s % c l i c . h e re .

Press Enter to save.

/. Record the Transaction in P!rchase 0o!cher 1to acco!nt the expenses2

To record the P!rchase 0o!cher Go to Gateway of Tally > ". $. cco!nting 0o!chers > 345 P!rchase

Press 3- and change the date to -(11(-61In Party +c $ame field select 0ibha Sec'rity Agency

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Reverse Charge of Service Tax

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4.

(nder Partic!lars% select Service 7edger - Sec!rity Services and press enter to vie& Service Tax >etails screen. In Service Tax *etails screen In Type of Ref field select $ew Ref from the ?ethod of Ad@'stment. In $ame field accept the defa'lt reference ='mber displayed P!rc+1/(1 &hich can be changed by the 'ser. In Type of Service field service type - Reverse Charge selected in party ledger &ill be defa'lted. In Category+Service field the service category selected in the Service 7edger &ill be defa'lted. Press 31-5 config!re and enable the option save. llow to override Service Category d!ring entry to )es and

2.

$ o t e * A s p er th e n e & Re ve rs e C h a rge s y s te m% o n S e c 'r i ty S erv i c es S e rvi c e P ro vi de r i s l i a bl e t o p a y t a x on $ 1 5 of th e a s s es s a bl e 0a l ' e & hi l e ra i s in g the in v oi c e. 6 n th e r em a i n i ng # 1 5 of th e A s s es s a bl e 0 a l ' e t he s erv i c e re c ei v er i s li a b le to pa y ta x.

Press bac)space )ey to navigate to Category+Service field and press Enter to vie& Taxa'le Percentage screen. -nter 166, in Taxa'le Percentage field In Tax #ia'ility , 1Service Provider2 field% enter -7,

$ o t e * I n R e l e a se / .8 % T a x 7i a bi l i ty o f s e rvi c e pr ovi de r h a s t o b e s pe c ifi e d i n T a x a ' l e P e r c en t a g e f i e l d*

T h e p rovi s i o n to s pe c i f y ta xa bl e pe rc e n ta ge a s &e ll a s th e ta x l i a bi l i ty of t h e s er vi c e pr ovi de r i n T a x ab l e P er c en ta ge s c ree n i s a va i l a bl e f rom Re l ea s e 2 .1 on &a rds .

Service

mo!nt* In this field enter the Service

mo!nt of Rs. 19769666 mo!nt field pl's Service Tax &ill be displayed in

mo!nt 1"ncl. of Tax2* The amo'nt specified in Service this field.

mk:@MSITStore:D: Program!2"#i$es Ta$$%&'RP9 Ta$$%'RP9Ref&chm::(Service)Tax)*&&& 12-Mar-14

Reverse Charge of Service Tax

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$ o t e * S er vi c e T a x i s C a l c ' l a ted o n $ 1 5 of t he A s s es s a ble 0 a l ' e i . e. 4 # 1 ! ! .

1. 3.

In

mo!nt field Service

mo!nt of Rs. "%1!%!!! &ill be displayed

Select Service Tax 7edger e.g. Service Tax : 1-,. Service Tax amo'nt &ill be calc'lated and displayed a'tomatically. Select -d'cation Cess 7edger e.g. Ed!cation Cess : -,. -d'cation Cess amo'nt &ill be calc'lated and displayed a'tomatically. Select Secondary and Bigher -d'cation Cess 7edger e.g. Secondary Ed!cation Cess : 1,. Secondary and Bigher -d'cation Cess amo'nt &ill be calc'lated and displayed a'tomatically. In ;ill(wise *etails screen In Type of Ref select $ew Ref In $ame field enter the bill n'mber - ;ill(67<= mo!nt &ill be defa'lted a'tomatically

#.

A.

..

The completed P'rchase 0o'cher is displayed as sho&n*

mk:@MSITStore:D: Program!2"#i$es Ta$$%&'RP9 Ta$$%'RP9Ref&chm::(Service)Tax)*&&& 12-Mar-14

Reverse Charge of Service Tax

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"!.

Press Enter to save and accept

$ o t e * R e ve r se Ch a ng e tra n s a c ti on s &i l l b e di s pl a ye d i n T a x o n S er v i c e s R e c e i v e d re por t & h en a c c o 'n t ed. 6 n c e th e p' rc h a s e t ra n s a c ti on i s re c orde d% t he ex ten t of in p 't c r edi t a va i l a bl e c a n be v i e&e d i n th e " n p !t Cr e d i t S ! mm a r y r epo rt.

>. Record the Payment 0o!cher 1to acco!nt the payment2

6n reverse charge transactions Service Tax liability on the service receiver arises only on ma)ing the payment to the service provider. Go to Gateway of Tally > ". $. 4. cco!nting 0o!chers > 375 Payment

Press 3- and change the date to 7(11(-61In *e'it field select 0i'ha Sec!rity In Service Tax *etails screen In Type of Ref field select gst Ref gency ledger and press enter to vie& Service Tax *etails screen

In $ame field select P!rc+1/(1 dated -(11(-61- to ad@'st the Pending Tax /ills /ased on the tax bill selected Type of Ref9 Category9 defa'lted. 2. In ;ill(wise *etails screen In Type of Ref field select gst Ref mo!nt 1"ncl. of Tax2 and Service mo!nt &ill be

In $ame field select ;ill(67<= to ad@'st the pending bill against the payment Rs. 197>9</7 &ill be defa'lted in 1. In Credit field select Canara ;an. mo!nt field.

mk:@MSITStore:D: Program!2"#i$es Ta$$%&'RP9 Ta$$%'RP9Ref&chm::(Service)Tax)*&&& 12-Mar-14

Reverse Charge of Service Tax

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The completed Payment 0o'cher is displayed as sho&n*

3.

Press Enter to save and accept.

7. Record a ?o!rnal 0o!cher 1to create Service Tax lia'ility2

The liability of tax to&ards Sec'rity services &ill arises only on payment to the service provider. To create Service Tax 7iability on Sec!rity services% create the 0o'cher Class in 8o'rnal 0o'cher. To create vo'cher class refer - Create the 0o!cher Class in ?o!rnal 0o!cher To record the transaction% Go to Gateway of Tally > ". $. 4. cco!nting 0o!chers > 385 ?o!rnal d@!stments from 0o'cher Class list

In Change 0o!cher Type screen% in Class field select Service Tax Press 3- and change the date to 7(11(-611

In %sed for field select Tax on Reverse Charge from the list of Service Tax

d@!stments

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Reverse Charge of Service Tax

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2. 1.

Press Enter to vie& Tax on Reverse Charge screen to calc'late Service Tax liability In Service Tax #ia'ility screen In Till *ate select the 0o'cher date to acco'nt all the reverse charge services p'rchased till the date of acco'nting the Service Tax liability. /y defa'lt 0o!cher *ate 7(11(-61- &ill be displayed. In Service Category field select the service received from the #ist of Service Categories.
$ o t e * C o' c a n s el e c t th e opt i on n y to c o ns i d er a l l t h os e s e rvi c e c a te gor i es &h i c h a re rec e i ve d on & h ic h s e rvi c e re c e i ver i s l i a bl e to c om p' te th e S er vi c e T a x l i ab i l i ty.

vail "np!t Credit5 Set this option to )es to consider the Service Tax amo'nt paid to&ards the sec'rity services as Inp't Credit for f'rther ad@'stment In Party #edger field select the service provider ( 0i'ha Sec!rity cco!nts gency from the #ist of #edger

$ o t e * C o' c a n s el e c t th e opt i on n y to c o ns i d er a l l t h os e pa rt ie s fr om &h om th e re ve rse c h a rge s e rv i c es a re re c ei v ed c om p' te th e S er vi c e T a x l i a bil i ty.

In A!tp!t #edgers section select

Service Tax : 1-, to acco'nt Service Tax Ed!cation Cess : -, to acco'nt -d'cation Cess Secondary Ed!cation Cess : 1, to acco'nt Secondary and Bigher -d'cation Cess
$ o t e * I n A ! t p ! t # e dg e r s s ec t io n S e rvi c e T a x l e dge rs ar e s el e c te d to c o m p !t e : c a l c 'l a t e; a nd c re a t e t he S erv i c e T a x l i a b il i t y :t o be pa ya b l e; on t he sec ' ri ty s e rv i c es p' rc h a s ed .

In "np!t +Expense #edgers section select

Service Tax : 1-, to acco'nt Service Tax Ed!cation Cess : -, to acco'nt -d'cation Cess Secondary Ed!cation Cess : 1, to acco'nt Secondary and Bigher -d'cation Cess

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Reverse Charge of Service Tax

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3.

6n accepting the Service Tax 7iability screen% Tally.-RP . A'to fills the details in 8o'rnal 0o'cher

#.

Press Enter to save and accept.

6n payment of Service Tax to the Government% the tax paid to&ards sec'rity services &ill be displayed in "np!t Credit S!mmary Report. To vie& the "np!t Credit S!mmary report% Go to Gateway of Tally > *isplay > Stat!tory Reports > Service Tax Reports > "np!t Credit S!mmary

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Reverse Charge of Service Tax

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mk:@MSITStore:D: Program!2"#i$es Ta$$%&'RP9 Ta$$%'RP9Ref&chm::(Service)Tax)*&&& 12-Mar-14