reverse charge mechanism w.e.f. 1-7-2012, the service receiver is liable to pay
tax, without any benefit of threshold exemption along with service provider also
liable for certain percentage on case to case basis (w.e.f. 1.7.2012 as per
Notification No. 30/2012-ST dated 20.6.2012 as amended by Notifications No.
45/2012-ST dated 7.8.2012 and 10/2014-ST dated 11.7.2014 and Notification No.
7/2015-ST dated 1.3.2015).
reverse charge mechanism, there is no option to service provider to pay Service
Tax on his own as under normal course. Also, under partial reverse charge, the
law does not provide the option of discharging Service Tax liability either by
service provider or by service receiver. Both are under statutory obligation to
comply with the requirements of reverse charge mechanism as notified.
LIABILITY TO PAY
UNDER REVERSE CHARGE BY SERVICE RECEIVER
Under Partial Reverse Charge (Proportional)
Under full reverse charge (100%)
· Renting of motor vehicles to carry
· Manpower supply & security
· (up to 31.03.2015)
· Works contracts
· insurance business services by
· Services by recovery agents
· goods transportation by road
· arbitral tribunals
· legal services
· company body corporate director’s services
· services provided by Government/ local authority excluding specified services
· services provided by persons
located in non-taxable territory to persons located in taxable in territory.
· Aggregator services (w.e.f.
· Manpower supply and security services (w.e.f. 1.4.2015)
As per clause
2(aa) of Service Tax Rules 1994, ‘aggregator’ means a person, who owns and
manages a web based software application, and by means of the application and a
communication device, enables a potential customer to connect with persons
providing service of a particular kind under the brand name or trade name of
BRAND NAME OR TRADE NAME
As per clause
2(bca) of Service Tax Rules, 1994, ‘brand name or trade name’ means, a brand
name or a trade name, whether registered or not, that is to say, a name or a
mark, such as an invented word or writing, or a symbol, monogram, logo, label,
signature, which is used for the purpose of indicating, or so as to indicate a
connection, in the course of trade, between a service and some person using the
name or mark with or without any indication of the identity of that person.
AMENDMENTS IN REVERSE CHARGE MECHANISM (VIDE
NOTIFICATION NO. 7/2015-ST DATED 1.3.2015)
provided by a person involving aggregator in any manner shall be under 100
percent reverse charge mechanism. Aggregator has been defined for this purpose.
2. Liability to
discharge Service Tax under reverse charge has been shifted from receiver of
service to person liable for paying Service Tax other than the service provider
supply and security services have been brought under full reverse charge
instead of partial reverse charge @ 75: 25 basis (w.e.f. 1.4.2015)
4. Services provided by –
(i) mutual fund agents, mutual fund
(ii) agents of lottery distributor
have been brought under reverse charge
consequent to withdrawal of the exemption on such services. Accordingly,
Service Tax in respect of mutual fund agent and mutual fund distributor
services shall be paid by the assets management company or, as the case may be,
by the mutual fund receiving such services. In respect of agents of lottery,
Service Tax shall be paid by the distributor of lottery (w.e.f. 1.4.2015).
of person liable to pay Service Tax has been incorporated for aggregator, mutual
fund and lottery distributors/selling agent.
REVERSE CHARGE AT
Description of Service
Liability of (%)
Nature of Person
provided by insurance agent to any person carrying on insurance business
mutual fund agent or distributor, to a mutual fund or asset management
management company or mutual fund
selling or marketing agent of lottery tickets to a lottery distributor or
or selling agent of lottery
provided by recovery agents
GTA : Freight
payer in specified cases of Consignor/Consignee
Corporate/ Partnership firm
service provided by any government/local authority
provided by director to company/body corporate