CA Sujeet Kumar

Sujeet KumarIn 2012, Govt. of India has changed the overall taxation of Service tax and that time they had presented a different taxation method to levy service tax on services which was negative List Based taxation method. All the services except services provide in Negative List and Exempted Services are taxable in India. This year in the Finance Bill 2015 Govt. of India again added some services in the list of taxable services and deletes the same from the list of Exempted services and made taxable for the first time. These are further taxable through the route of Reverse Charge mechanism.

Changes in Reverse Charge Mechanism i.e Notification No. 30/2012 is as follow:

1. Service which are taxable for the first time and taxable through the route of Reverse Charge mechanism from 01st April 2015 is as follow:

  • Service by Mutual fund agent or distributer to Mutual Fund Company or Assets Management Company.
  • Service by selling or marketing agent of lottery ticket to a lottery distributor or selling agent

2. Service provided by a person involving an aggregator in any manner is taxable for first time from 01st March, 2015. Further definition of Aggregator has been from added under new clause (aa) of Sub-rule (1) of Rule 2 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 the aggregator.

3. From 01st April 2015, Services by way of supply of manpower or security service has been brought under full reverse charge. Earlier it was under partial reverse charge and Service provider was liable to pay 25% of service tax and service receiver was liable to pay 75% of service tax.

4. Definition of Support Service has been deleted and All Service except Renting of immovable property, and services specified in sub- clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994 provided By Any Government or Local authority to business entity will be covered under Reverse Charge mechanism unless any service exempt under anywhere. These Changes will be notified by Central Govt. through Gazetted Notification.

Updated Chart of Reverse Charge is given below: chart

Other Points to be considered

1. Under full Reverse Charge Mechanism Cenvat Credit of service tax can be taken on payment of taxes to Govt. even service amount have not been paid to Service provider.

2. Under Partial Reverse Charge Mechanism Cenvat Credit of Service tax paid by service provider can be taken after receipt of Bill but Cenvat credit of service tax paid by service receiver can be taken only after payment of Taxes to Govt. as like Full Reverse charge Mechanism.

Earlier Cenvat Credit of service tax paid by service receiver under Partial Reverse Charge Mechanism can be taken when Service tax has been to Govt. and bill amount has also been made to Service provider. This change has been applicable from 01st April, 2015.

3. Cenvat Credit of service Tax can be availed within one year from date of payment of service Tax to Govt. Earlier Time limit was only 6 Month. This change is applicable from 01st April, 2015.

4. Point of Taxation in case of Reverse Charge is Date of Payment provide if payment is not made within 6 month from the date of invoice then Point of taxation shall be determined as if this rule does not exist.

(Author can be reached at his mail id  sujeetshegal@gmail.com)

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36 responses to “Updated Partial/ Full Reverse Charge mechanism Chart”

  1. H L Arora says:

    Dear Sir,

    We are a Pvt. Ltd. Company engaged in mfg. and paying freight to Transport Co.. The said transport Co. is also a Limited Co. and charging Service Tax on freight in Consignment Note (After taking abatement). Now we want to clarify in this case we shall have to pay service tax under R.C.M while we had already paid service tax to transporter who is also regd. under service tax.

  2. sreenivasulu suresh says:

    Dear Sir,

    I would like to ask service tax clarification about SBLC . Actually we have availed loan from Bank of Tokyo,Singapore branch based on SBLC which was issued by Thai based holding company and same as they charged SBLC Fees to us.

    Hence I request you, Please clarify whether service tax applicable or not for above stated SBLC fees.

  3. rajat agarwal says:

    a limited company receive service from transporter to send goods own branch , the company liable to pay service tax under RCM?

    • CA Rocco says:

      Yes ,the company who is liable to pay freight will be liable to pay service tax under reverse charge mechanism rules for availing GTA services.

  4. Sourbh Aggarwal says:

    Sir,

    A firm provided monpower supply to a compnay. But by mistake the firm has charged service tax and collected the same from the company and paid to government. I want to know is the company liable to pay service tax under rcm now. Also clarify whether the firm can take input credit of the same.

  5. Piyush says:

    I know you posted this query 7 months ago, but in case you still are unsure about it, i guess not, here’s my opinion.
    Since Ola and uber are body corporate there is no RCM applicability and hence Ola is charging service tax on abated value i.e. 40%.

  6. Pappu says:

    If manpower service is provided by company to another company then what is the rate of service tax under reverse mechanism?

    • nehaal says:

      no service tax under reverse charge in that case. the service provider would pay st and charge it to service receiver as in normal service tax

    • mehul says:

      This aint a case of reverse charge because service provifer is not one of the following : huf , individual , partnrship firm or AOP. There service provider will pay the service tax liability.

  7. R.N. Jaiswar says:

    Sir,

    We are GTA. One of our consignor (Company)want to supply material to Government organisation. Whether service tax on freight payable by GTA or Consignor itself.

    Please reply,

  8. swapnil shingvekar says:

    Sir,
    we are running partnership firm in construction business. we have paid labour contractor his bill which includes 14.5% service tax and we have deducted 1% TDS from the bill. now the issue is, we accept service tax of 3.63%(including swachh bharat hike) from our buyers of flat (customers). so, how much service tax we have to pay to govt.? should the already paid service tax to contractor be deducted from the collected service tax?, as we have already paid it to contractor.
    please,explain the mechanism behind this issue.
    warm regards,
    swapnil

  9. vipin singh says:

    sir,

    last line of your article says:

    Point of Taxation in case of Reverse Charge is Date of Payment provide if payment is not made within 6 month from the date of invoice then Point of taxation shall be determined as if this rule does not exist.

    means what ????

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