Reverse charge mechanism

[palaniappan thirukalathiappan]

Dear Experts,

I wish to know in reverse charge mechanisam, what is the %age of service tax payment to be done by SP & SR if SP & SR both are Pvt. Ltd organisations.

[YAGAY and SUN]

In this scenario, service provider will charge the service tax 100%, collect from service recipient and deposit into the Government's account.

[Ashwani Rustagi]

If the Service Provider is pvt. ltd. company than there is no service tax liability on SR under reverse charge mechanism.

[NK SHETE]

I do agree with the views of two experts.

[Ankur Agrawal]

for applicability for reverse charge mechanisam on supply of manpower, security services & renting and hiring of vehicles following two condion must be satisfied:

1. Service provider -: he must be individual, huf, parternship firm (registered/unregistered)

2. Service Receiver -: company registered under companies act.

AI Summary

Reverse charge mechanism requires recipient to pay tax where provider is individual or firm, not when provider is private company.
Reverse charge arises for supply of manpower, security services and renting/hiring of vehicles only when the provider is an individual, HUF or partnership firm and the recipient is a company; the provider will charge and collect the full service tax and deposit it, whereas if the provider is a private limited company the recipient has no reverse charge liability.