Service Tax under Reversal of Charge

[Rajeev Kedia]

If Service Tax not charged by service provider ( as his total revenue does not exceed Rs. 10.00 lacs) should service receipient have to pay service tax under reversal of charge in such case ?

[JAMES PG]

In respect of services like manpower supply, advocates, works contract, rent a cab, GTA  etc  service receiver is laible to pay partial/full ST payment under reverse charge

[JAMES PG]

Effective from 7.08.12, for security services also.

[RAKESH R]

Dear Sri Rajeev

For payment of service tax on reverse charge method, the service recipient has to pay  his share of liability (whether full or partial ) irrespective of the applicability of small scale exemption to actual service provider.  

According to the  Proviso to Notification No. 33/2012 ST dated 20.6.2012, the benefit of threshold exemption is not available to person liable to pay service tax as specified in  Section 68(2) of the Finance Act, 1994.

You are advised to pay service on the percentage of tax liability applicable to you

Advised accordingly 

S. GOKARNESAN

Advocate

09840087349

 

 

 

 

 

[Ashwani Rustagi]

Liability on recipient of service in case the recipient is body corporate i.e a Company

 

In case where the service provider is individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons and service recipient is body corporate i.e a Company, then such Company shall be liable to pay service tax to the extent depicted below w.e.f. 01.07.2012–

 

1.    Rent a Cab:  40%

2.    Supply of Manpower including security Service: 75%

3.    In respect of  services  provided or agreed to be provided  in service portion in execution  of works contract 50% and

4.  Advocates - 100%

This Service Tax has to be paid by the Corporate Service receiver irrespective of the fact that the total revenue of service provider does not exceed Rs. 10.00, service receipient have to pay service tax.

AI Summary

Reverse charge liability requires recipients to pay service tax despite provider's threshold exemption being unavailable. Recipients under the reverse charge mechanism must pay service tax even if the provider qualifies for the small taxpayer threshold; the threshold exemption does not apply to persons liable to pay under the notification's proviso, and corporate recipients must remit the prescribed share of tax for categories such as rent a cab, manpower including security, works contract service portions, and advocates.