REVERSE CHARGE MECHANISM

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  1. aditya pathak

    aditya pathak New Member

    There is a party A who provides motor vehicle on rent,with whom a party named B had contracted for the supply of motor vehicle. In this contract, a clause is mentioned as "the prices will be inclusive of all charges including taxes" party a raises a bill of amount Rs.2109 to party b party a is availing abatement so party b will caculate service tax as 2109*40%*12.36%=104.269
    now my question is which option is correct for payment to party A-

    option 1
    paid to Party A 2109-104.269=2004.731 and party B should deposit Rs. 104.269 as st to gov.
    option 2
    paid to party A 2109 and party B should deposit Rs. 104.269 as st to gov.from his own
     
  2. Sekhar Chandra

    Sekhar Chandra New Member

    Option 1 is perfect.

    Hiring of means of transportation designed to carry passengers to any other person who is not in the same line of business is a service for which partial reverse charge mechanism apply i.e both service provider and service receiver are required to deposit the total service tax amount in the specified ratio.
    However if abatement is availed @60% then total amount is required to be paid by service receiver in your case it is Mr. B
     
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