Skip to Content
Former Member
Dec 24, 2012 at 01:24 PM

service tax payable on free issue material


Hi experts

Subcontracting activity involves sending free issue components to the subcontracting Vendor for some processing and these free issue components are issued (consumed) through mov type 543 while doing GR against Subcon PO.

Principal party (sender) has to charge (pay) service tax on the value of the free issue components sent for subcontracting activity. As we know, components are not maintained in the main PO line item so we can't assign the tax code for the free issue components.

Kindly suggest as how the service tax can be charged (to be borne by the principal party i.e. sender) in free issue material sent for subcontracting.

thanks in advance.