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Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense...

Wednesday, July 25, 2012

Reverse Charge Mechanism in Service Tax - new services incorporated - applicable w.e.f 01-07-2012

Reverse Charge Mechanism in service tax 

....way to harsh for a service recipient



It may not be a new concept. The service recipient has to register under service tax and have to periodically file service tax return . 

A list of newly added services have been incorporated under this reverse mechanism scheme w.e.f 01-07-2012 under partial reverse charge. The list includes the services & service tax payable in prescribed ratio by the person providing the service as well as the service recipient:  

Sl. No. 1) Service provided by insurance agent carrying on insurance business - Service provider (NIL) & Service recipient (100%);

Sl. No. 2)  Services provided by goods transport agency in connection to transport of goods by road - Service provider (NIL) & Service recipient ( 100%);

Sl. No. 3) Services provided by way of sponsorship - Service provider (NIL) & Service recipient (100%);

Sl. No. 4) Services provided by Arbitral Tribunal - Service Provider (NIL) & Service recipient (100%);

Sl. No. 5) Services provided by Individual Advocate - Service Provider (NIL) & Service recipient (100%);

Sl. No. 6) Services provided by way of support service by Government & Local Authority - Service Provider (NIL) & Service recipient (100%);

Sl. No. 7) Services provided by way of renting/hiring motor vehicle to carry passenger:
  • on abated value -  Service Provider (NIL) & Service recipient (100%);
  • non-abated value -  Service Provider (60%) & Service recipient (40%);
Sl. No. 8) Services provided by way of supply of manpower for any purpose - Service Provider (25%) & Service recipient (75%);

Sl. No. 9) Services provided by way "Work Contract"- Service Provider (50%) & Service recipient (50%);

Sl. No. 10) taxable services provided by anyone located in non-taxable territory& recipient of service by any person within taxable territory i.e. in case of import of services - Service Provider (NIL) & Service recipient (100%);


However, the said reverse charge is only applicable only upon fulfillment of certain conditions:-



  • Sl. No. (1)- Any service provide or service recipient;
  • Sl. No. (2) -   In case where the consignor or the consignee  is,— (a)  any factory registered under or governed by the Factories Act, 1948 (63 of 1948); (b)  any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; (c)  any co-operative society established by or under any law; (d)  any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made there under; (e)  any body corporate established, by or under any law; or (f)  any partnership firm whether registered or not under any law including association of persons;
  • Sl. No. (3) - It covers any service provider but the recipient of services shall be body corporate or Partnership Firm;
  • Sl. No. (4) - Covers Arbitral Tribunal as Service Provider and  Service receiver shall be a business entity with a total turnover above 10 Lakh in the previous year.
  • Sl. No. (5) - Service Provider shall include Individual or Firm & the service recipient shall be a business entity with a total turnover above 10 Lakh in the previous year. 
  • Sl. No. (6) - Service provider be a Govt. or local authority and the service receiver a business entity
  • Sl.No.(7),(8)&(9) - Service provider shall cover Individual/proprietor/Partnership Firm (may or may not be registered)/ Hindu Undivided Family and the service receiver shall be a company incorporated under the Companies Act, 1956 or could that be any business entity (registered in the capacity as a body corporate in a taxable territory)
  • Sl. No. (10)- Service provider and service receiver shall cover 'any'.


Dear readers,


IF any of you are in receipt of any of the above services and is covered under specified category as service recipient, then you shall immediately get yourself registered under service tax.


Thank You !

...xxx...



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