Chartered Accountant
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Comments

(subramanian) Posted On: 16 Aug, 2012

Sir, a) a whole time director has let out a building to the Company , which is used by an employee . Would this rent payment would be within the purview of reverse tax introduced recently (b) Similarly a director charges for his professional services (as CA ) to the Company .Would this be covered under Reverse charge if the bill is inclusive of service tax claimed by him?

(a) The CBEC has been introduced reverse charge mechanism on services provided by directors through the Notification No. 45/2012 dated 07/08/2012. The relevant Para is as follows: ““5A in respect of services provided or agreed to be provided by a director of a company to the said company” The notification does not specify that which services provided by directors are covered under the reverse charge mechanism? The interpretation of above Para makes it clear that every services provided by director of company will cover under the Reverse charge mechanism and company is liable to pay 100% service tax in respect of services provided by directors under the Reverse charge mechanism. So rent payment is also covered under the reverse charge mechanism. (b) In case of services provided by directors to company, 100% liability on company to pay service tax on company under the reverse charge mechanism. The reverse charge is mandatory not an option. If the bill is inclusive of service tax and it is mentioned on the face of invoice then calculation can be done on cum-price basis and service tax will be paid accordingly. Also, the payment will be made to director after deducting service tax.
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Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

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09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
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NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
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Phone No. :
079-32999496, 27560043

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093777659496, 09377649496

E-mail :pradeep@capradeepjain.com