Reverse charge mechanism makes service receivers liable for service tax, requiring registration and exposing non compliance to penalties.
The Reverse Charge Mechanism shifts service tax payment liability to persons other than the service provider, typically the service receiver, for specified taxable services and imports; it does not apply to non taxable or exempt services and there is no threshold exemption for RCM liabilities. A defined list of services is subject to full or partial reverse charge. Service receivers liable under RCM must obtain service tax registration and file returns; non payment, failure to register or to file returns attracts interest and penalties under the service tax law. (AI Summary)