Liability to pay service tax

[VK Verma Indirect Tax Consultant]

What is the basis of liability to pay service tax under reverse charge mechanism?.Is it on due basis or payment basis keeping in view the fact that the service recipient is the person to make payment of charges and the tax too.

[madhavvan n]

As per provisions of ST Service tax payment is to be made only after receipt of payment, hence where payments have been made by service recepient for services chargeable to service tax on reverse charge the service tax is also required to be discharged once payments to parties have been made, it is not on due basis

AI Summary

Reverse charge service tax liability arises on payment by the service recipient, not on accrual. Liability to discharge service tax under the reverse charge mechanism is triggered by actual payment by the service recipient; service tax is payable when the recipient makes payment to the provider and is not imposed on a due or accrual basis.