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As we are witnessing the major changes in the Service Tax Rules/Acts recently. Under Reverse Charge Mechanism the service recipient is liable to pay the service tax instead of service provider. However in certain cases both service provider and service recipient has been made liable to pay service tax. The service receiver has to register himself under service tax and service receiver cannot claim general exemption limit of 10 Lakh rupees.
Please find below chart depicting the liability of Service Receiver & Service Provider under Reverse Charge Mechanism in very precise and simplified manner. It shall be very handy in day to day working of professionals under industry.
In this Article Author has discussed Reverse Charge Mechanisam on Services of an insurance agent to any person carrying on insurance business, Services of goods transport agency in respect of transportation of goods by road, Services by way of sponsorship , Services of an arbitral tribunal Services of advocates (individual/firm), Services of directors of a company, Support services by Government or local authority, Import of Service, Renting of a motor vehicle designed to carry passengers on abated value / non abated value, Supply of manpower for any purpose or security services & Works contract.
Till 31.03.2011, point of taxation in case of eight specified services including Chartered Accountants (CAs) was determined on the basis of receipt of payment. However, w.e.f. 01.04.2011, this benefit has been extended to all services albeit, in a slightly modified form. Now all individuals, partnership firms (including limited liability partnership firms) having a turnover not exceeding Rs. 50 lakh in the previous year can pay service tax on receipt basis in the current financial year.
Taxation of services in India has been a learning experience for not only the tax payers but also the tax administrators. The gradual expansion of the list of taxable services from an initial three to more than one hundred has posed its own challenges. The Finance Act, 2012 has started to change this all and usher in a new system of taxation of services; popularly known as the Negative List.
At present there are 17 items in the negative list (Section 66 D of the Finance Act, 1994) and 39 items in the mega exemption notification 25/2012-ST dated 20.6.2012. Government has recently exempted more services from the purview of service tax.
Service tax of 12.36 per cent has been imposed on the taxable services provided by the Film Artists. As a preparation for the introduction of a nationwide comprehensive Goods and Service Tax (GST), comprehensive approach to taxation of services has been brought into effect from the 1st day of July, 2012.
Reverse charge mechanism- Usually service provider is liable to pay service tax for the services provided except for the few services covered under reverse charge, under which service receiver is liable to pay service tax. This mechanism has not been altogether a new mechanism. This mechanism was prevalent in the earlier service tax law as well. However scope of this mechanism has been enlarged in a greater way.
This PPT is released by Ministry of Finance on 13.07.2012 and it discusses following important changes in Services tax effected by Union Budget 2012 :- Budget at a glance Rules of interpretation Place of Provision Rules, 2012 Negative list concept Point of Taxation Miscellaneous Towards GST Download PPT on Changes in Service Tax
Budget 2012 Presented by Finance Minister on 17.03.2012 proposed that the cycles for the payment service tax and filing of return should coincide. In View of the same Following Changes are proposed in Rules Related to periodicity of Service tax Return Filing and Service tax payment.
