Service Tax Reverse Charge

[Jyoti Sahoo]

Dear all,

Good Morning,

Please help me in service tax reverse charge method.

Is service tax laible to pay by service receiver in reverse charge method even if service provider not covered under service tax laibility i.e he is below Rs 10,00,000/- tournover.

please help me,thanks in advance.

 

Regards,

CMA Shanmukha.

[YAGAY and SUN]

Under partial reverse charge mechanism, the service provider and the service recipient is liable to pay service tax to the extent of their liability as prescribed in the Service Tax Law.  This has two aspects, namely:-

1. If the service provider has not crossed the threshold limit, then, he is not liable to pay the service tax.
2. But there is no such exemption available to service recipient under PRCM.  He has to pay the service tax at any cost on his liability.

[SANJIV KOTHARI]

 

Service receiver is liable to pay tax under reverse charge irrespective of the status of service provider whether eligible for service tax payment or not.

 

Regards

Sanjiv

[Jyoti Sahoo]

Thank You Mr.Pradeep & Mr.Sanjay for your valuble feedback.

 

Section 68(2) of the Act does not provide Threshold exemption of 10 Lakhs in case of Reverse Charge mechanism where service tax is payable by person other than service provider  (i.e. service receiver).

This means service tax liable to pay by service receiver in reverse charge method even if service provider not covered under service tax laibility.

 

[NK SHETE]

I support the views of Pradeep Khatri,  SANJIV KOTHARI and varsha mehta

[Neha Kankani]

why reverse charge method is used for service tax?

AI Summary

Reverse charge: service recipient must pay service tax even if supplier is below the registration threshold under partial reverse charge.
Under the partial reverse charge mechanism the service recipient must pay service tax where law assigns liability to a person other than the service provider; the provider's not crossing the turnover threshold does not exempt the recipient, and Section 68(2) does not confer a threshold exemption for those liable under reverse charge.