TaxTMI 
TaxTMI 
TaxTMI 
As the Union Budget has proposed multiple changes in Service Tax in light of Negative List of Services, an important aspect of burden of tax liability under Reverse Charge concept has also been proposed to be replaced from existing provisions.
Applicability of New Reverse Charge Mechanism
According to Notification No 15/2012-ST dated 17.03.2012, the proposed Reverse Charge Mechanism will be made applicable from the date on which Section 66B of the Finance Act, 1994 comes into force. The said Section 66 will come into force only upon the date when the Finance Bill, 2012 is passed by the Parliament and receives the consent of the Hon’ble President of India to be called as Act.
Therefore, the new reverse charge mechanism will be applicable from the date when Finance Bill, 2012 is enacted.
Clarification on new reverse charge mechanism in respect of services of Rent –a – cab, Manpower Supply and Works Contract
Under the new reverse charge mechanism will also be applicable in respect of
a) Rent – a – cab service
b) Manpower power supply service
c) Works Contract service
However, this reverse charge under above mentioned three services will be applicable only if, the service provider of these 3 services is an Individual or HUF or Proprietary or partnership firm or AOP and the service receiver is a Company registered under Companies Act, 1956
Details and applicability of new reverse charge mechanism in case of all the services:
Description of a service | Service provider | Service receiver | Percentage of service tax payable by the person providing service | Percentage of service tax payable by the person receiving the service |
Insurance Services in respect of services provided or agreed to be provided by aninsurance agent to any person carrying on insurance business | Insurance agent | Business man carrying on insurance business | Nil | 100 |
GTA in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road | Goods transport agency | Consignor or Consignee is specified person | Nil | 100 |
Sponsorship in respect of services provided or agreed to be provided by way of sponsorship | Any person | Body corporate or partnership firm | Nil | 100 |
Arbitral Tribunal in respect of services provided or agreed to be provided by an arbitral tribunal | Arbitral tribunal | Business entity | Nil | 100 |
Advocate Services in respect of services provided or agreed to be provided by individual advocate | Individual advocate | Business entity | Nil | 100 |
Support Service in respect of services provided or agreed to be provided by way of support service by Government or local authority | Government | Business entity | Nil | 100 |
Rent a Cab Services (a)in respect of services provided or agreed to be provided by way of renting or hiring any motor vehicle designed to carry passenger on abated value. (b)in respect of services provided or agreed to be provided by way of renting or hiring any motor vehicle designed to carry passenger on non abated value. | Individual/HUF/ Proprietary or partnership firm/AOP | Company under Companies Act, 1956 | Nil 60 | 100 40 |
Supply of Manpower in respect of services provided or agreed to be provided by way of supply of manpower for any purpose | Individual/HUF/ Proprietary or partnership firm/AOP | Company under Companies Act, 1956 | 25 | 75 |
Works Contract Services in respect of services provided or agreed to be provided by way of works contract | Individual/HUF/ Proprietary or partnership firm/AOP | Company under Companies Act, 1956 | 50 | 50 |
in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory | Any person | Any person | Nil | 100 |