Step by Step Reverse Service Tax Mechanism Documentation

Step by Step Reverse Service tax Mechanism Documentation

By Senthamil .T, Sterling and Wilson Ltd

Type of services covered:

1. 50:50 SERVICE (Vendor & Service tax dept)

2. 25:50 SERVICE (Vendor & Service tax dept)

3. COMPOSITE JOB SERVICE

4. NON ABATED VAUE SERVICE

5. ABATED SERVICE

This reverse charge rule is applicable only to the Vendor/ subcontractors who are Individual, proprietary concern, HUF, Partnership Firm, AOP, Trust, Co-op Society etc.

The above rule is not applicable to Private Ltd Company and Limited Company.

1) 50:50 SERVICE (Sub- contractors & Vendor who provides Repairs & Maintenance Services)

Case:1(50:50)

Where Subcontractor is registered under Service Tax , Then Sub contractor will raise an Invoice for works done of Rs. 10,000/- + plus Service Tax @6.18% (50%) only and we have to pay balance @6.18 (50%) to the Service Tax Department.

( If any Subcontractor is claiming / charging Service Tax @12.36% then we have to pay Sub-Contractor Service Tax to the extent @6.18% only and not @12.36% )

GT- Basic S.tax TDS

ET- Ecess on S.tax TDS

ST- Hcess On S. Tax TDS.1. The above codes are automatically picked from vendor master. Before post invoice, pls check

above codes in withhold tax tab & add the basic job work charges amount with GT, ET & ST codes.

2. If you are not found the above codes (GT,ST& ET) in WHT tab,then pls contact to Mr.XXXXX to update the vendor master.

3. If you are not add base amount above code in WHT tab, then system wouldn’t calculate correct amount

4. Service tax code should be T1 only( rate 6.18%,create tax code in A/P side ,MM module)

Case: 2(0:50)

Where Subcontractor is not registered under Service Tax due to what so ever reason , Then Sub contractor raise Invoice for works done of Rs. 10000/- Then we will pay to the Sub- contractor only Rs. 10,000/- But we have to pay Service tax on reverse charge basis @6.18% (50%) to the Service Tax Department.

GT- Basic S.tax TDS

ET- Ecess on S.tax TDS

ST- Hcess On S. Tax TDS.1. The above codes are automatically picked from vendor master. Before post invoice, pls check

above codes in withhold tax tab & add the basic job work charges amount with GT, ET & ST codes.

2. If you are not found the above codes (GT,ST& ET) in WHT tab,then pls contact to Mr.XXXXX to update the vendor master.


4. Service tax code should be V0 only( rate zero, create tax code in A/P side ,MM module)

(25:75) Manpower Supply Services & Security Supply Agencies Services).

Case:3(25:75)

Where Vendor is registered under Service Tax , then Vendor will raise an Invoice for works done of Rs. 10,000/- + plus Service Tax @3.09% (25%) only and we have to pay balance @9.27% (75%) to the Service Tax Department.


G1- Basic S.tax TDS

E1- Ecess on S.tax TDS

S1- Hcess On S. Tax TDS.

1. The above codes are automatically picked from vendor master. Before post invoice, pls check above codes in withhold tax tab & add the basis job work charges amount with G1, E1 & S1 codes.

2. If you are not found the above codes(G1, E1 & S1) in WHT tab,then pls contact to Mr.XXXXXX to update the vendor master.


4. Service tax code should be T2only (Rate 3.09% create tax code in A/P side ,MM module)

Case:4(0:75)

Where Vendor is not registered under Service Tax due to what so ever reason , Then Vendor raise Invoice for works done of Rs. 10000/- Then we will pay to the Sub- contractor only Rs. 10,000/- But we have to pay Service tax on reverse charge basis @9.27% (75%) to the Service Tax Department.

G1- Basic S.tax TDS




2. If you are not found the above codes(G1, E1 & S1) in WHT tab,then pls contact to Mr.XXXXX to update the vendor master.


4. Service tax code should be zero tax ( choose V0 only)

3. COMPOITE JOB SERVICE TAX (WITH OUT BREACK of MATERIAL & SUPPLY or installation)

Case:5(VAT not applicable)

Where Vendor is registered under Service Tax , then Vendor will raise an Invoice for works done of Rs. 10,000/- + plus Service Tax @2.472 %(50%) only and we have to pay balance @2.472% (50%) to the Service Tax Department.


G2- Basic S.tax TDS




2. If you are not found the above codes(G2, E2 & S2) in WHT tab,then pls contact to Mr.xxxxxl to update the vendor master.


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5. Service tax code should be tax code ( choose t4 only, Rate 2.472% create tax code in A/P side ,MM module)

Case:6 (VAT applicable Depend on state wise)(VAT 5% applicable in MH state)

Where Vendor is registered under Service Tax , then Vendor will raise an Invoice for works done of Rs. 10,000/- + plus Service Tax @2.472 %(50%) & VAT 5% only and we have to pay balance @2.472% (50%) to the Service Tax Department


G2- Basic S.tax TDS




2. If you are not found the above codes(G2, E2 & S2) in WHT tab,then pls contact to Mr.xxxxxl to update the vendor master.


1. Service tax code should be tax code ( choose t5 only, Rate 2.472%& VAT rate:5% create tax code in A/P side ,MM module)

4. NON ABATED VALUE (Vendor who provides Rent a cab Services(Passenger Vehicle only )

Where Service provider is registered under Service Tax , Then Service provider will raise an Invoice for vehicle hiring charges of Rs. 10,000/- + plus Service Tax nil only and we have to pay balance @12.36 (100%) to the Service Tax Department.

(If any Service provider is claiming / charging Service Tax @12.36% then we have to pay Service provider Service Tax to the extent @ nil only and not @12.36% )

G3- Basic S.tax TDS


S3- Hcess On S. Tax TDS.1. The above codes are automatically picked from vendor master. Before post invoice, pls check

above codes in withhold tax tab & add the basic job work charges amount with G3, E3 & S3 codes. 2. If you are not found the above codes(G3,S3& E3) in WHT tab,then pls contact to Mr.XXXXX to

update the vendor master.3. If you are not add base amount above code in WHT tab, then system wouldn’t calculate correct

amount4. Service tax code should be V0 only( 0%)

5. ABATED VALUE (ON 40% @12.36 = 4.944)

Where Service provider is registered under Service Tax , Then Service provider will raise an Invoice for vehicle hiring charges of Rs. 10,000/- + plus Service Tax nil only and we have to pay balance @4.944% (100%) to the Service Tax Department.

( If any Service provider is claiming / charging Service Tax @4.944% then we have to pay Service provider Service Tax to the extent @ nil only and not @4.944% )

G4- Basic S.tax TDS



1. The above codes are automatically picked from vendor master. Before post invoice, pls check above codes in withhold tax tab & add the basic job work charges amount with G4, E4 & S4 codes.

2. If you are not found the above codes(G4,S4& E4) in WHT tab,then pls contact to Mr.XXXX to update the vendor master.


4. Service tax code should be V0 only( 0%)

Step by Step Reverse Service Tax Mechanism Documentation

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