Advocate Santosh Kumar

The Finance Bill, 2012 has massively rattled the provisions related to service tax enshrined in the Finance Act, 1994. A New reverse charge mechanism has been proposed by the Finance Bill, 2012. And by the latest Finance Bill, Section 68 (2) of the Finance Act, 1994 has been put under amendment to put the onus of payment of service tax on reverse charge basis partly on service provider and partly on service receiver. Three specific services i.e. hiring of means of transport, construction and man power supply have been chosen for this purpose.

After the proposed amendment sub-section (2) of Section 68 of the Finance Act, 1994 reads as follow:-

“notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

 Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part to the service tax shall be paid by the service provider.”

Now, in exercise of the powers conferred by amended sub-section (2) of section 68 of the Finance Act, 1994 , The Central Government has issued Notification No.15/2012-Service Tax#, dated 17/03/2012,and suppressed the notification No. 36/2004-Service Tax, dated the  31st  December, 2004,and hereby notified the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section (2) of Section 68.

The taxable services (mentioned in column 2), Provided or agreed to be provide,—

Table

Sl.No.

(1)

Description of a taxable service

(2)

 Extent of service tax payable in %  by Service Provider

(3)

Extent of service tax payable in %  by Service Receiver

(4)

1  by an insurance agent to any person carrying on insurance business Nil 100%
2 by a goods transport agency in respect of transportation  of goods by road* Nil 100%
3 by way of sponsorship, ,  to anybody corporate or partnership firm located in the taxable territory; Nil 100%
4 by an arbitral tribunal** Nil 100%
5 by individual advocate** Nil 100%
6 by way of support service by Government or local authority** Nil 100%
7 (a)  by way of renting or hiring any motor vehicle designed to carry passenger on abated value.

(b)   by way of renting or hiring any motor vehicle designed to carry passenger on non abated value.

Nil

 

 

 

 

60%

100 %

 

 

 

 

40%

8. by way of supply of manpower for any purpose 25% 75 %
9. by way of works contract*** 50% 50%
10 by any person who is located in a non-taxable territory and received by any person located in the taxable territory Nil 100%

 *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 thereunder;

(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.

 ** to any business entity located in the taxable territory.

 ***by any individual, Hindu Undivided Family or  proprietary firm or  partnership firm, whether registered or not, including association of persons;  located in the taxable territory to any company formed or registered under the Companies Act, 1956 (1 of 1956) or a business entity registered as body corporate located in the taxable territory.

# This notification shall come into force from the date on which section 66B of the Finance Act, 1994 comes into effect.

Article Prepared by :-

Name:- Advocate Santosh Kumar

Address :- WZ-64A, Mukherjee Park , Tilak Nagar, New Delhi- 110018.

Mobile:- 9958391853

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6 responses to “Service Receiver to Pay Service Tax under New reverses charge mechanism (Must Read)”

  1. Navneet says:

    Good Evening Sir,

    If land lord not giving bill for office rent and we are paying full amount ( i.e. Basic + Service Tax ). Please guide on following points ..

    1) Is bill required?
    2) If bill not received then, how can search
    that he pay or not service tax?
    3) If he has not paid service tax then,
    Is Service Receiver responsible pay this
    service tax?

  2. Pramod Kalme says:

    1) Testing and Sealing
    2) Removing Testing & Sealing & Re-fixing
    3) Cutting & Restoring
    4) Cost of Repairs
    5) Making Water Connection
    6) Supply of water through Tanker

    Sir,
    I would like to know that above mentioned 1) to 6) which services are taxable under Finance Act 1994. Please reply as early as possible.

  3. Mini Pradeep says:

    Sir,

    Could you please clarify that The service receiver should remit tax at the time of payment to the provider or at the time of getting service bills

  4. Shashi says:

    We are getting marketing service from a person and he has not registered with service tax because his turnover below five lakhs and for this type service receiver has to pay the service tax

  5. S.K.KHETAN says:

    wHAT IS THE AMOUNT OF SERVICE TAX TO BE PAID BY SERVICE RECEIVER IN THE CASE OF TRANSPORTER UNDER REVERSE CHARGE FOR EXAMPLE SAY THE TOTAL AMOUNT IS 2000.00 THEN WHAT SHOULD BE TAXABLE AMOUNT ON WHICH THE SERVICE RECEIVER SHOULD PAY THE SERVICE TAX ( IS IT ON 25% OF RS.2000.00 ). THAT IS SHALL BE PAY 62.00 SERVICE TAX AMOUNT

  6. B.SEKAR says:

    We would like to clarify that manufacturing of jobs (registered under factories act) and Labour  job works companies should also register with service tax complaisance and from which date is should be started? b.sekar “mail ID ” machenggco@bsnl.in. please clarify. 

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