Reverse charge mechanism requires service recipients to register and pay apportioned service tax in cash, with input credit subject to restrictions.
Reverse charge mechanism shifts service tax liability to specified service recipients who must register and pay their apportioned tax in cash; tax attaches only to activities that qualify as taxable services under the statute and place of provision rules determine territorial taxability. Point of taxation under RCM is generally the date of payment (if within six months of invoice) or the invoice date; valuation follows service tax valuation rules with special provisions for works contracts and abatement. Input credit is available after payment of tax under RCM but subject to cenvat restrictions and reversal rules. (AI Summary)