IMPORTANT
HIGHLIGHTS
ON
SERVICE TAX REVERSE CHARGE MECHANISM
CHARGEBLITY:
The Service Tax shall be levied on all services provided or agreed to be provided in India, other than the services
provided specified in Negative List.
REVERSE CHARGES IN SERVICE TAX W.E.F 01.07.2012:
Reverse charge Mechanism in Service Tax is not a new concept. Under this scheme,
Service Tax is payable by service recipient instead of Service Provider.
service Receiver have to be Register himself under Service Tax.
Service Receiver has to pay even on Few rupee of service received, he can not claim General Exemption
limit of Rs. 10.00 lakh rupees.
He (SR) has to register himself in service tax and have to file Service Tax Return on prescribed interval.
Moreover under the service tax NIL return is also mandatory and every registered person have to file
HALF YEARLY return.
Reverse Charge Mechanism: Service provided/ paid Before/After 01.07.2012
Notification No. 30/2012-ST dated 20.06.2012
The coverage of situation wherein service tax is payable under reverse charge mechanism by
including following additional services/ situation:
i. Legal services received by a business entity from individual advocate or partnership firm of advocates;
ii. Legal services by a business entity from arbitral tribunal
iii. Specified Services received by business entity from government or local authority;
iv. Following services received by body corporate business entity from Individual, Huf, Partnership firm,
Aop;
a) Renting of Motor Vehicle designed to carry passengers.
b) Supply of manpower.
c) Work Contract Services
The applicability of reverse charges in respect of additional services/ situation covered by said
notification is services/situations covered by said notification is summarized as under:
Situation Applicability of Reverse Charge Mechanism
Service have been provided or payment has Service Receiver is not person liable to pay Service Tax.
been made prior to 01.07.2012 (service tax shall be paid by service provider only)
Both the following events will take place on
or after 01.07.2012:
i. payment to Service Provider, and
ii. Provision of Services
Service Provider and service recipient shall pay service
tax as per provision of notification 30/2012-ST dated
20.06.2012
Note: Date of issue of invoice is immaterial for this purpose.
In the following case service receiver and provider has to pay service tax in prescribed ratio :
Sl
No.
Description of a Service Percentage of
service tax
payable by the
person
providing
service
Percentage of
service tax
payable by
the person
receiving the
service
1 Service provided or agreed to be provided by an
INSURANCE AGENT to any person to any carrying
on insurance business.
NIL 100%
2 Service provided or agreed to be provided by a
GOODS TRANSPORT AGENCY in respect of
transportation of goods by road.
Nil 100%
3 Service provided or agreed to be provided by way
of Sponsorship .
Nil 100%
4 Service provided or agreed to be provided by an
Arbitral Tribunal
Nil 100%
5 Service Provided or agreed to be provided by
Individual Advocate
Nil 100%
6 Services provided or agreed to be provided by way
of Support Service by Government or Local
authority
Nil 100%
7 In respect of services provided or agreed to be
provided by way of renting or hiring any Motor
Vehicle Designed to carry Passenger on abated
value.
In respect of service provided or agreed to be
provided by way of renting or hiring any motor
Nil
60%
100%
40%
