reverse charge under service tax (updated 31st oct, 2014)
DESCRIPTION
Implications and Applicability of Reverse Charge under the provisions of Service Tax.TRANSCRIPT
Reverse Charge under Service Tax
CA. DHRUV SETH
31ST OCTOBER, 2014
Legislative competence
Sec 68(2) of the Finance Act, 1994
Notification 30/2012 as amended till date
RCM Services - Import
Type of Service Service Recipien
t
% payable by Provider
% payable by Receiver
Provided from non taxable territory to taxable territory
Any Person
Nil 100%
Note : - Non Taxable territory also includes Jammu &
Kashmir. To be read in conjunction with Place of Provision
Rules to determine the location of service.
RCM Services – Recovery Agent
Type of Service
Service Recipient % payable by
Provider
% payable by Receiver
By a Recovery Agent
Banking Company, NBFC, Financial
Institutions
Nil 100%
Note : - Only “Recovery” services covered under reverse
charge and not “Collection” services.
RCM Services – Works Contract
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
WCT by a Individual, HUF, Firm or AOP
Body Corporate
50% 50%
Note : - Works contract as defined in Sec 65B of the finance
act, 1994. After abatement of 60% effective rate to be 2.472%
on recipient and provider for original works.
RCM Services – Manpower
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
Manpower supply by a Individual, HUF, Firm or AOP
Body Corporate
25% 75%
Note : - Manpower supply includes Security services also. Manpower supply would mean pure supply of
manpower with no supervision or control over the manpower by the provider.
RCM Services – Renting Vehicle
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
a Individual, HUF, Firm or AOP not in similar line
Body Corporate
Nil (with abatement)
50% (without)
abatement
100% (with abatement)
50% (without)
abatementNote : - Applies only in case it has been provided not in
the same line of business. Such as vehicle renting to a construction company
RCM Services – Government
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
Government or Local Authority
Business Entity Nil 100%
Note : - Any “Support” service by the government for
which a consideration is charged by them. To a “Business entity” not a “body corporate” so
individuals, HUF etc. also covered under RC.
RCM Services – Director
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
Director Body Corporate
Nil 100%
Note : - Only non executive directors covered. Any amount paid to them is to be subject to
service tax under reverse charge by the company.
RCM Services – Advocate
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
Legal Services Business Entity Nil 100%
Note : - Only Legal services (under any law) by Individual
advocates under the ambit of reverse charge. To a “Business entity” not a “body corporate” so
individuals, HUF etc. also covered under RC.
RCM Services – Sponsorship
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
Any sponsorship
Body Corporate or a
Firm
Nil 100%
Note : - Sponsorship of sporting events excluded. To a body corporate or a partnership firm.
RCM Services – Goods Transport
Type of Service
Service Recipient
% payable by
Provider
% payable by Receiver
Good transport services by road
Company, Firm, Factory,
Society, Excise
Nil 100%
Note : - Service recipient is the person who pays or is
liable to pay the freight.
Common Problems
ChallanCodeRegistrationCENVATPayable date
