Reverse charge in Service Tax

Devraj Sharma

For minimisation of service tax evasion central government extended the liability of service tax payment from provider of service to recipient of service. In other word in some cases service recipient pays service tax.

As per rule 2(1)(d) of SERVICE TAX RULES, 1994 followings services are under preview of Reverse charge -:

FULL REVERSE

Whole amount of service tax is paid by service receiver

1. Services provided or agreed to be provided by INSURANCE AGENT to a person who is carrying business of insurance.

2. Services provided or agreed to be provided by RECOVERY AGENT to BANKING COMPANY or FINANCIAL INSTITUTION or NON BANKING FINANCIAL INSTITUTION

3. In respect of services provided or agreed to be provided by a MUTUAL FUND AGENT OR DISTRIBUTOR to MUTUAL FUND OR ASSETS MANAGEMENT COMPANY.

4. In respect of services provided or agreed to provided by SELLING OR MARKETING AGENT OF LOTTERY TICKETS to LOTTERY DISTRIBUTOR OR SELLING AGENT.

5. In respect of services provided or to be provided by GOODS TRANSPORT AGENCY in respect of transport of goods to

a. Factory register under factories act, 1948

b   Body corporate established under any law

c    Society registered under the society act,1860 or any other law for the time being    force.  

e   Co – Society registered under any law,

d   Dealer who is registered under central excise act, 1944

e   Partnership firm whether registered or not

Provided that when such person is located in a non-taxable territory, the provider of such service shall be liable to pay service tax.

6. In respect of services provided or agreed to be provided by way of SPONSORSHIP SERVICE to ANYBODY CORPORATE OR PARTNERSHIP FIRM located in taxable taxable territory.

7. In respect of services provided or agreed to be provided by arbitral tribunal to any business entity located in taxable territory.

8. In respect of services provided or agreed to be provided by INDIVIDUAL ADVOCATE OR PARTNERSHIP FIRM OF ADVOCATES by way of legal services to BUSINESS ENTITY located in taxable territory.

9. In respect of services provided or agreed to provided by a DIRECTOR OF A COMPANY OR BODY CORPORATE to THE COMPANY OR THE BODY CORPORATE

10. In respect of services provided or agreed to be by GOVERNMENT OR LOCAL AUTHORITY by way support services to BUSINESS ENTITY located in taxable territory except -:

a) Renting of immovable property

b)  Services specified in sub clauses

( i ) Services by department of post by way of speed post, express parcel post, life insurance and agency services provided to a person other than government

(ii) Services in respect of aircraft or vessel, inside or outside the area of a port or an airport.

(iii) Transport of goods or passengers of clause (a) of section 66D of the finance act, 1994

11. In respect of services provided or agreed to be provided by way renting of motor vehicle by INDIVIDUAL, HUF OR PARTNERSHIP

to BODY CORPORATE, designed to carry passengers on abated value to any person who is not carrying similar business.

12. In respect of services provided or agreed to be provided by way of supply of MANPOWER for any purpose or SECURITY services by INDIVIDUAL, HUF , PARTNERSHIP FIRM

     to ANYBODY CORPORATE.

13. In respect of services provided or agreed to be provided by any person who is located in NON TAXABLE TERRITORY and received any person LOCATED IN THE TAXABLE TERRITORY.

14. in relation to service provided or agreed to be provided by a person involving an aggregator in any manner ,the liable to pay tax is aggregator of the service .

PARTIAL REVERSE CHARGE

15. In relation to portion in execution of work contract service provided or to be provided by individual, HUF, proprietary partnership

To business entity register as body corporate.

50% pay by provided by Service Provider

50% pay by recipient of service

16. In respect of services provided or agreed to be provided by way renting of motor vehicle by individual, HUF or partnership to body corporate, designed to carry passengers on non abated value to any person who    is not carrying similar business.

       50% pay by provided by Service Provider

       50% pay by recipient of service

(Author can be reached at devraj.kekri@gmail.com )