Reverse Charge Mechanism

[Deepak Whorra]

Dear Experts,

If the service receiver for Security Services is a Partnership Firm, then is the reverse charge mechanism applicable.

The notification states if the the service receiver is a Company as per the companies act or a body corporate in any taxable region, the Reverse Charge mechanism will apply.

My confusion is over the words : Body Corporate being SEPERATELY MENTIONED FROM THE WORDS COMPANY UNDER THE COMPANIES ACT. WHAT DOES THAT MEAN / IMPLY...

WILL SOME EXPERT ENLIGHTEN ME AND OBLIGE. tHANK yOU

[Udaya Chandran]

Service tax on Security services is not applicable for Partnership firm under Reverse Charge Mechanism. Service receiver need to pay only 75% of ST and 25% will be paid by Service provider.

AI Summary

Clarification on Reverse Charge Mechanism: Partnership Firms Pay 75% Service Tax on Security Services, Not Applicable to Body Corporates. A query was raised regarding the applicability of the reverse charge mechanism for service tax on security services when the service receiver is a partnership firm. The notification specifies that the reverse charge mechanism applies if the service receiver is a company or a body corporate. The inquirer sought clarification on the distinction between 'body corporate' and 'company.' An expert responded, clarifying that for partnership firms, the reverse charge mechanism does not apply; instead, the service receiver pays 75% of the service tax, while the service provider pays the remaining 25%.