reverse charge under service tax (updated 31st oct, 2014)
DESCRIPTION
Implications and Applicability of Reverse Charge under the provisions of Service Tax.TRANSCRIPT
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Reverse Charge under Service Tax
CA. DHRUV SETH
31ST OCTOBER, 2014
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Legislative competence
Sec 68(2) of the Finance Act, 1994
Notification 30/2012 as amended till date
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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.
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Common Problems
ChallanCodeRegistrationCENVATPayable date