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Reverse charge mechanism in service tax ( RCM)

Reverse charge mechanism in service tax  ( RCM) (section 68 (2) ) has been introduced  with effect from 1/7/2012. With its introduction, service receiver is also liable to file return and pay service tax on the portion of service tax.

Motive of this change is mainly more tax compliance and increase tax revenue but it is giving hardship to service receiver as if your liability for payment of service tax under reverse charge is small amount like Rs. 1000 or Rs. 100, you have to get registration under service tax act and pay service tax and file return.But rules are rules and we have to follow it.

Applicability of reverse charge mechanism in service tax ( RCM):

Not all service receiver  are liable to pay service tax under reverse charge. Only on receiving specific services , reverse charge mechanism is applicable.

Is service receiver paying extra service tax due to reverse charge mechanism?

No, amount of service tax payment is remained the same but liability to pay tax to government is apportioned between service receiver and service provider.

Example OF RCM:

 

If work contractor has rendered services and charged bill of Rs. 100000. Service tax liability is Rs. 1,00,000*14%*70%  = 9800. (30% abatement)

Suppose service receiver is liable to pay 50% of service tax under reverse charge mechanism. which is 4900 ( 9800/2).

Service provider will charge bill of Rs. 104900 (100000+ 4900)

So he is collecting half of the service tax and paying to government. Remaining service tax liability will be paid by service receiver.

Small service provider exemption:

small service provider exemption is not available under reverse charge mechanism and service receiver has to register himself under reverse charge mechanism without considering how much amount he is required to pay under RCM. Sometimes service provider is availing SSI exemption and does not charge service tax in bill. Still you are required to pay service tax as service receiver if RCM is applicable.

When to pay tax under reverse charge?

Service receiver has to pay tax on reverse charge only on making payment to service provider. The condition is that service receiver should pay within 6 months from issuance of invoice.

Payment of Tax:

Tax should be paid in cash and you can not utilize cenvat credit for payment of service tax under reverse charge.

TDS in RCM:

The big question is ‘should service provider deduct TDS on whole bill inclusive service tax or on amount of services provided?’

This question is solved by circular no 1/2014 dated 13th January , 2014. It clarifies that TDS should be deducted only on amount of service and not on service tax collected if service tax amount has been shown separately in invoice. otherwise TDS should be deducted on whole amount including service tax.

Abatement availability:

Benefit of abatement is also available in reverse charge. Service receiver and provider has to pay service tax on the value of services after considering available abatement for service.

Example:

IF work contract service provided is Rs. 2,00,000. Service tax amount is Rs. 19600*50% = 9800.

Total bill is Rs. 209800.

In this case, TDS should be deducted on Rs. 2,00,000 if service tax is shown separately in bill. Otherwise TDS should be deducted on Rs. 209800.

Center credit availability:

Service tax paid under reverse charge mechanism is available for cenvat credit if the service received is included in definition of  input service. Service receiver should keep GAR 7 challan ‘ as proof of payment.

Reverse charge mechanism in various services:

ServicesService providerService receiverTax payable by service receiverTax payable by service provider
Insurance agent servicesInsurance agentInsurance company100%0%
Sponsorship serviceAny personBody corporate/partnership firm100%0%
Arbitral tribunal servicesArbitral tribunalBusiness entity100%0%
Legal servicesIndividual advocate/firm of advocateBusiness entity having turnover exceeding 10 lacks p.a.100%0%
Director’s serviceDirectorCompany100%0%
Support services by government or local authorityGovernment or local authorityBusiness entity located100%0%
Renting of motor vehicle designed to carry passengers to any person who is not in same business (when service provider has not availed abatement)Individual, HUF, proprietor /partnership firm, AOPBusiness entity registered as body corporate50%50%
Supply of manpower serviceIndividual, HUF, proprietary, partnership firm, AOPBusiness entity registered as body corporate100%*0%*
Work contract serviceIndividual, HUF, proprietary, partnership firm, AOPBusiness entity registered as body corporate50%50%
Service received from non taxable serviceLocated in non taxable territoryLocated in taxable territory100%0%

* As per budget 2015 changes, supply of manpower service is covered under full reverse charge mechanism.

Meaning of important words:

Business entity :

(Definition in section 65B (17) of financial act, 1994.

Business entity means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession.

In short, if any service is provided for personal use of individual ,it is not taxable. Likewise charitable organisation is not covered under business entity if it does only charitable activity and no business.

Body Corporate:

A company and LLP is a body corporate. A cooperative society, society and proprietary firm are  not body corporate.

Other points:

  1. Liability of payment of service tax is individual and service receiver is not liable for liability of service provider or vice verse.
  2. Reverse charge will not apply when service receiver is in non taxable territory. In that case, whole amount of service tax should be collected and paid by service provider.
  3. Service receiver and service provider can do valuation of services on different principles.

What if service provider has paid service tax ( portion which should be paid by service receiver under RCM)?

In that case, service receiver is not liable to pay service tax again due to double taxation. So by mistake, your service provider paid service tax himself which you need to pay under RCM, you are not required to pay service tax again under RCM.

Supporting case laws :

  1. M/S Lilason Breweries VS CCE bhopal
  2.  CCE vs om tea company

 

I have tried my best to explain main points of reverse charge mechanism in service tax. Still if you have any query, ask me through comments. Don’t forget to share this post on social media to encourage me to write more.

 

 

128 Comments

  1. By Vikas Shrivastav

    Sir/madam

    i give contract for interior of my office, is i am liable for reverge charge.my company is pvt.ltd. what percentage i should charge under service tax.please revert as soon as possible

    • By admin

      You have private limited company.If you avail service from Individual, reverse charge mechanism will be applicable for work contract. SO under reverse charge mechanism, 50% of service tax amount is required to pay by you under reverse charge. and 50% amount of service tax will be charged by individual under the bill. You are not providing service so you should not charge bill.If you are availing service from corporate, full amount of service tax should be charged by service provider.

      • By R. Muthukumaran

        If service provider is individual and the service receiver is partnership firm. reverse charge mechanism will be applicable

      • By admin

        No, service tax is not applicable.

  2. By Rajesh Kotrike

    Hai,

    I have other quewstion, say like its a car hire charges, and the service provider is an individual,
    he does not charge me service tax for the service provided as his turnover form the service doesnot exceed the limit. here the service receiver is a Corporate body, so the corporate body has to pay reversetax? what will be the amount to be considered for calculating, as the provider invoice doesnot state any thing for service tax.

    2. If a service proivder and the receiver are in contract, what will be the situation for the service of car hire,

    let me know what will be the impact.

    Regards,
    Rajesh Kotrike

    • By admin

      For first case, service tax will not be levied because service provider can avail SSI exemption and no need to pay service tax under reverse charge for company.
      For second case, if service provider and service receiver are in contract, service receiver can avail cenvat credit for service tax paid to service provider. If you explain the contract details, I can reply better.

      • By Ritesh Nigam

        But as per above explanation.SSI exemption does not apply in RCM

  3. By satyanarayana

    Dear Sir/ Madam,
    I have a doubt about service tax on Works contracts, please clarify, details are if service provider given the bill for Rs. 10000/- only for services rendered. and Tax of Rs. 1236. and other bill of Rs. 40000 for material with VAT of Rs.5800/-. here my query is am i to pay service tax 50 % of Rs. 1236 or 50% Rs. 433 (10000 @70 % after abatement)= rs. rs. 7000@12.36 (50%)= 433. please clarify my doubt.

    # PLEASE TELL ME THE SERVICE TURNOVER LIMIT FOR APPLICABILITY OF SERVICE TAX#

    • By admin

      If separate value of service is charged in bill, you cannot claim abatement of composition scheme. So you are required to pay Rs. 1236 service tax. If you are individual, no reverse charge mechanism will be applicable. Read my post on reverse charge mechanism – http://taxmasala.in/reverse-charge-mechanism-in-service-tax/ to understand more.
      Service tax turnover limit is Rs. 10 lakh per annum.

  4. By sidhick

    I want to know whether the present abatement rate on service tax in respect of guest house shall be applicable

    • By admin

      Yes, it is applicable for fy 2014-15 and fy 2015-16 till today’s date.

  5. By AYAN GOSWAMI

    Hi, wanted to know whether Service Tax is payable by either the Service Receiver or the Service Provider when a Bank’s Branch hires a car in a rural area on and off(without any contractual agreement) for physical transfer of cash to another Branch. The car belongs to an individual who does not have a Service Tax number and nor does he/she quotes any service tax amount on the cash bill. It would be helpful, if you can cite the appropriate provision in the Service Tax law while answering my query. Thank you

    • By admin

      If service provider has not turnover of Rs. 10 lakhs, service tax liability will not be due. There is no reverse charge for renting of vehicle for transportation of goods.

      So bank is not liable for service tax.

      If that person has service tax registration no., he is required to charge 12.36% service tax on bill. Please discuss the matter with him.

  6. By Monika

    As reverse charge is to be paid at the time of making payment, payment amount includes the amount of service tax which is paid by the service provider. Here it seems to be double taxation, as service tax is to be paid on the amount which is inclusive of service tax. Kindly clear the doubt…

    • By admin

      No, under reverse charge mechanism, some portion of tax is charge by service provider and some portion of service tax is required to paid by service receiver himself. Service provider is not charging 100% tax in that case. No double taxation.

  7. By S K BANSAL

    I want to know whether a co-operative society engaged in banking business registered under Co-Operative Societies Act, is a body corporate. Is meaning of body corporate as per notification 30 as above is different from definition as per Service Tax Act?

    • By admin

      Co operative society is not body corporate. Please clarify the question. For which service, are you asking the question? Please give details.

  8. By S K BANSAL

    Meaning of body corporate and Co-Op. Society is important for reverse charge Mechanism. If Co-Op. Society being service recipient is not a body corporate, then reverse charge is not applicable.

    • By admin

      But for which service are you asking?

  9. By shibin

    i want to know whether the service tax reverse charge mechanism were applicable for the service of pollution testing for DG sets, short blasting facility. If yes how much of service tax is payable for the service receiver. (here service provider does not collect any service tax)

    • By admin

      No reverse charge mechanism will be available here. service provider should collect service tax if his turnover of services exceed Rs. 10 lakhs. Rate is 12.36%

  10. By ankush

    I am working in Pvt Ltd company, our company getting service for retainer (ISO,TPM & Quality) & bill amount is rs.100000 monthly, this service received from 2012 to till date, pls suggest this service is come under RCM, if yes how much amount to pay including Penalty & Intrest

    • By admin

      Please clear service you receive. After that, I can suggest.

  11. By kn chaturvedi

    Hi

    what is the status when service provider charges service tax say in case of labor supply contract at full rate ie 12.36% and deposit it.

    the receiver of services will have to provide for 75% of 12.36% and pay it again

    • By kn chaturvedi

      labor supply contrct

      • By Monika

        Hii,

        I have one question on your above suggestion that it is the liability of service recipient to pay under reverse charge. I have seen practically that if service provider who has deposited the service tax portion to the government gives the same in writing to service recipient then there is no need to pay service tax again by service recipient. Can you please explain?

    • By admin

      The reverse charge will be applicable for manpower supply service when service receiver is corporate and provider is individual, HUF, firm.

      You should talk with service provider and yes, it is your liability to pay service tax at reverse charge and not of service provider.

      Read my post,

      http://taxmasala.in/service-tax-on-manpower-supply-service/

    • By Girish Joshi

      What if service provider pays service tax instead of service receiver (original works contract – new consturction)

      • By admin

        In that case, no need to pay service tax again by service receiver as per case laws of lilason breweries vs cce bhopal.

      • By Girish Joshi

        Dear Madam
        Company is manufacturing Excisable and non excisable products.
        Manpower (Labour Contract workers) are utilised for both excisable and non excisable product.
        Service tax is paid by company i.e. receiver pays all the service tax on labour contract bill.
        In this case can company avail service tax credit while paying excise duty?

      • By admin

        You can utilize cenvat credit of service tax paid under RCM but for the portion which was utilized in production of excisable product.

      • By girish Joshi

        in response to Girish Joshi:

        Dear Madam Company is manufacturing Excisable and non excisable products. Manpower (Labour Contract workers) are utilised for both excisable and non excisable product. Service tax is paid by company i.e. receiver pays all the service tax on labour contract bill. In this case can company avail service tax credit while paying excise duty?

        Reply :You can utilize cenvat credit of service tax paid under RCM but for the portion which was utilized in production of excisable product.

        But madam , Vendor gives total bill for manpower supplied during month, then how to calculate the portion of excisable and non excisable product service tax. any machanisum for the same.

      • By G S Joshi

        Dear Madam
        our manpower supplier gives common bill for manpower use for the month which also includes manpower used in canteen , housekeeping , and labour used in prodn of excisable goods and non excisable goods.
        In this situation whether we should take separate bill for each service of labour provided or is there is any mechanism by way we can take service tax credit.
        Thanks

      • By admin

        Rule 6 of cenvat credit rules apply here.

  12. By ankush

    I have one question, our company started new plant construction in other place & we have paid some amount to construction firm (Rs.1000000 in F.Y.13-14,Rs.2000000 in F.Y.13-14)
    please confirm we are liable to pay service tax under RCM or can we take service tax credit of this transaction, also confirm the interest & penalty.

  13. By D.V.R.Mallikarjun

    we have retainership agreement for 20,000 per month for legal services and understand 100////5 of ST to be paid by the recepient (our company). please let us know the format of invoice to be given by the service provider. whetehr he has to give invoice for only basic value or he has to mention Service tax amount also .

    • By admin

      He will charge only basic amount. He will not mention service tax amount. You are required to pay service tax your own.

  14. By cmjoseph fca

    Should the service provider mention in the invoice that the service receiver has to pay service tax under reverse charge if the invoice is issued to a body corporate?

    • By admin

      Not compulsory but small note at the end of the invoice is good practice.

  15. By vaibhav dalvi

    hello need
    1. Analysis of various services under RCM is given under

    2. Exemption from Payment of Excise Duty

  16. By deepak

    Madam, Thanks for your very clear presentation.
    As per above example you had taken 70% (30% as abatement) for works contract amount.
    my clarification is regarding Rule 2A(ii) and notification 24/2012 dt 6/6/2012, there prescribe three different situation. 40%, 70%, and 60%. taxable.
    in case if original work the taxable portion will be 40% (and abatement 60%). instead of 70% (abatement30%).
    pl suggest.

  17. By Sunny Mehta

    Dear Ma’am, what if invoice of Material and Labour are issued separately having a single agreement of works contract. Is RCM applicable to the same?

    • By admin

      When there is work contract, reverse charge mechanism will be applicable.

  18. By SUDHIR

    WHETHER RCM IS APPLICABLE IN BPO (SERVICE OUT SIDE INDIA THROUGH TECH SUPPORT) COMPANY IF YES HOW. CAN SERVICE RECEIVER TAKE REFUND FROM DEPARTMENT AGAINST SERVICE TAX PAID CAB( MOTOR VEHICLE). SERVICE RECEIVER HIRE CAB ON MONTHLY BASIS AND PAY SERVICE TAX UNDER RCM. TOTAL RECEIPTS OF BPO IS FOREIGN MONEY WHICH IS EXEMPT.
    MY QUESTION IS WHETHER RCM IS APPLICABLE OR NOT.
    WHETHER SERVICE RECEIVER IS LIABLE TO PAY SERVICE TAX UNDER RCM BECAUSE OF HIS INCOME IS EXEMPT.

    • By admin

      The service is provided in India and as per place of provision of service. Service is taxable and if reverse charge mechanism is applicable, service receiver is liable to pay service tax. Please check status of service provider and receiver for RCM applicability.

  19. By chandrakumar

    I am a freelancer and my yearly billing value is less than ten lakhs. I understand that if total earning less than ten lakhs I fall under SSL and service tax is exempted. In this case I need to understand how the receipt is made to client? do i need to specify 0% tax or tax exempted? Is there any other procedure?

    • By admin

      No need to mention about service tax. However if you are adding column service tax, write 0 % in it.

  20. madam
    We are paper trader and SSI unit with Pvt ltd status We pay Sales commission. The Sales agent is not registered with ST for that purpose and unable to avail input credit
    Normally we raise Credit note for commission payable to him.and release payment to his company name
    ( his company status is a Pvt ltd)
    Now can we pay the ST on Commission on RCM( I think its is not applicable) or we have to bill him and pay to Department by us only

    Please advise

    • By admin

      Commission is not covered under reverse charge mechanism. If he is not registered with department, he will not issue bill with ST and you are not required to pay ST under RCM.

      • Madam in our case service provider, a sales agency company and not raising his bill for commission and not registered with ST.
        But We are (service receiver) paying agency commission thru C/N
        Can we work out and remit the Ser Tax amount directly to dept.

      • By shivanand

        we (PVT LTD) are paying Sales commission to agent – The agent is registered with ST and PVT LTD company (he registered only for Rent income purpose) Now what is the treatment for ST payment on sales commission.

  21. By sanjiv sharma

    In case a company is providing services to a company under Works Tax Contract. May please advise whether 50%-50% Service tax liability is applicable

    • By admin

      NO, the reverse charge mechanism will not be applicable when corporate is providing service to corporate. charge 100% in bill.

  22. By Shayan

    Mam Excellent Article I am still a student
    Just wanted to ask Can you explain CENVAT CREDIT incase of RCM when can i avail it or when can i not please

    • By admin

      Cenvat credit can be availed for tax paid under RCM. However, cenvat credit cannot use to pay tax under RCM. Means TAX under RCM should be paid via cash only.

  23. By Arun S

    Ma’am it will be very helpful for me if you share any complete details regards of Service Tax,where i can get understand from basic concept, i need to understand complete procedure of service tax, rcm and cenvat

  24. By anil more

    Dear Madam,Provident fund corporation charge us administrative charges every month ,when we make payment of employee pf share and company share. I want to know whether it is coming under RCM under govt support services and service tax is applicable or not.

    • By admin

      As per my view, it is not covered under RCM and the department will charge in bill if applicable.

  25. By allthebest

    Mam can we take cenvat credit of the service tax amount that we paid under reverse charge for works contract.?
    Fir which service where service tax is payable under reverse charge , we cannot take cenvat credit?
    Pls reply

    • By admin

      Yes, you can avail cenvat credit If the service can be classified as input service.

      • Madam
        “”Yes, you can avail cenvat credit If the service can be classified as input service””
        If we availed abatement and paid ST- then what is restriction /status of availing of input credit

  26. By Chandrasekhar

    Good Article.

    -Have done a nice job and will follow webiste regularly.I have two questions:

    1. If service receiver is covered under Basic Exemption Limit of Rs.10/- Lakhs or in negative list, Do that service receiver have to collect and pay service tax under reversal charge mechanism.
    2. All the Practicing CA, CS and CWA are covered under definition of pure agent, I believe all the practical out of pocket expenditure is out service tax ambit, if we indicate in the bill separately.

    Thanks.

    • By admin

      1. Yes , he is required to pay under RCM no matter about his own liability if RCM is applicable.

      2. Agree with point 2 .

  27. By Abhay

    Man power is supplied by Body Corporate & Service Recipient is also Body Corporate. Then such case, whether service tax will come under RCM or normal provision will apply ?

    • By admin

      No, it does not come under RCM.

  28. By Sivaraman.A.R

    Work contract service(for construction of building/civil structures or part therof) provided by Individual to a Body corporate.
    1. Contractor charges ST @ 50% of bill. Collect it from co and he pays to govt.
    2. Body coporate pays ST @ 50% bill directly to govt under RCM.

    Since work contract is not input service, cenvat credit not available on point 1.

    Can we take cenvat credit of RCM paid on point 2?

    • By admin

      You can get cenvat credit only and only if the service is in the list of input service otherwise not. The construction service in work contract is already excluded for input service definition and cenvat credit is not available even if you pay under RCM.

      • By Sivaraman.A.R

        Thanks a lot

  29. By Asha

    Service provider (Individual) offers Business Auxilliary and Manpower Services. Paying Service tax on BAS but Manpower is exempt. Do he requires to get registered under Manpower Services and show the turnover in the Service Tax Return

    • By admin

      No, no need to get registered under category of manpower service when full value is exempt. However, he should be registered for business auxiliary service.

  30. By manoj

    grt

  31. By Nisarga

    Is service provider a company, also liable to pay service under reverse charge mechanism in case of legal services received? If yes , is company required to register as a service receiver Or can company pay service under reverse charge by mentioning its assesses code that it registered as service provider?

    • By admin

      Company has to register to pay service tax under RCM.

  32. By SOURABH

    PLEASE PROVIDE ME,IF THE ABATEMENT IS AVAILABLE ON SERVICES AS BUSINESS AUXILIARY SERVICES AND WHAT IS TAXABLE PORTION OF THAT SERVICES

    • By admin

      There is no abatement for business auxiliary service.

  33. By Sandy

    One Individual contractor is engaged in material inspection works by a Partnership unit, the said work is executed inside the partnership unit premises already registered under service tax. The contractor is paid 1 Lakh every month and would reach the exemption limit i.e. 10 Lakhs soon.
    Clarification needed :
    1. Whether the service recipient can pay service tax liability thereon?
    2. Is it necessary for the individual service provider needs to get registered himself under Service Tax?
    3. If the service provider need to get registered, than under which premises he should get himself registered?
    (for the work is executed under the same premises)
    4. Can the contractor get registered his nearby residence instead?

    • By admin

      Contractor need to register himself under service tax. He can get registration under service tax under his residence. As per my understanding, he works on premises of client but that does not mean he need to show client premises as place of business.

  34. By yesvandhraj.s

    Hello madam/sir
    Can u explain , how RCM concept differed from Abatement concept or is both are same ?

  35. By gaurav

    whether a company providing exempted service needs to take registration just to pay service tax on reverse charge mechanism

  36. By deepak popat

    An individual providing services of Borwell work for government organisation Public Health Engineering of Madhya Pradesh. The work is alloted to through e tendering to the individual contractor. My querry is whether the individual can claim exemption S. No. 12 of the notification No. 25/12-ST as he is doing borewell work of state government of madhya pradesh.

  37. By Vishal

    whether reverse charge is applicable if sp is Proprietorship firm and sr is Pvt LTd. co. for Fees of Interior designing charges.

  38. IS CENVAt allowed on service tax paid on work contracts?

  39. By bhanu pratap singh

    Mam.
    Bussiness entity ki turnover ki limit upto 10 lakh..ko only lagal service ke case me check krna hai. .ya rcm ke sabhi case me..

  40. By Madhurima Samanta

    how to pay Service tax under RCM online?

  41. By shivkamal soni

    hi mam,

    I would like to ask u ,As service tax input credit did not matched with working of april 2014 ( in books),and service tax return unable to revise

  42. By Kishore Kumar Sethy

    Hi Ms. Tarannum,

    Congratulation! It is a good article. I have few queries regarding service tax RCM: What is liability or non-compliance in following cases:
    1. In case service provider is charging service tax where RCM is applicable and same paid to service provider and deposited in the account of Govt. by service provider. Is that a non-Compliance? If it is non-compliance then what is the options are available for earlier paid transactions to ratify it?
    2. In case service provider is providing a service that is out of RCM purview but service category mentioned as per its ST-2 is that on which RCM is applicable. What is the deciding factor of category of service (Actual service provided and described on Invoice OR Service category mentioned on the invoice?
    3. In case of work contract if separate invoices are provided by Vendor for material and service provided then whether service provided will be subject to RCM clause?
    4. Where service provider is not charging service tax on its bill or where is RCM is not applicable, is there any liability of service provider?

    Thanks,
    Kishore

  43. By Bhupen CH Deka

    Madam,

    We are a PSU Company. We are receiving Technical Services form a foreign vendor (ABC) (Quatar Company) . The Vendor has Permanent Establishment in India.

    By mistakenly we have deducted the Service tax from the vendor’s bill and deposited the service tax to Govt. treating the service provider as foreign vendor.

    Now Tax Department is asking the Service provider (ABC) to deposit the service tax amount and imposing penalty and interest on them also.

    Department is saying that the tax is deposited by service recipient (Our Company ) from service recipient’s registration number. Thus service provider cannot claim that the service tax liability is discharged, and asked the service provider to deposit the service tax amount again.

    Department is suggesting the service provider to collect the service tax amount from us (Service Recipient) and deposit the amount from there registration number.

    Can Department ask to pay service tax amount again on the same service twice?( As the service tax was already paid by us , the service recipient. This will be the case of double taxation)

    Regards ,

    Bhupen CH Deka

    • By Rakesh Trivedi

      I am Back Ground Musician I have to provide service for some foreign company should i have to charge service tax to them

  44. By usha

    Ma’am, what is the service tax to be charged in the case of manpower supply (100% reverse charge) where the service provider is raising invoice for Rs 10000 but the service receiver is paying only Rs 9600 after deducting liquidated damages of Rs 400. Should the service receiver compute service tax on Rs.10000 or Rs.9600. Pls explain along with relevant provision.

  45. Please tell me Is a vendor who is registered in ST2 liable to pay service tax if he provide service(Man power-Helper) to a charitable foundation trust (ISKON) who are catering mid day meal to school children and they are service tax exempted organisation?

  46. By Kishore

    Very Informative Article.

    Dear Madam,

    I have one doubt with regard to Service Tax Applicability on below mentioned case:

    We are society (AOP) and conduct medical conference:

    Situation 1
    Income/Receipts
    Registration Fees Received: Rs. 8,00,000
    Sponsorship Received: Rs. 50,00,000

    Situation 2
    Income/Receipts
    Registration Fees Received: Rs. 9,70,000
    Sponsorship Received: Rs. 50,00,000

    Whether Service Tax Applicable, If Applicable What is the Service Tax Liability.

  47. By Nikhil Bajaj

    We are a partnership firm and thinking to appoint a security agency for acquiring security guards. The security agency is also a partnership firm. Do we have to register under service tax and pay service tax under reverse charge mechanism?

  48. By Sameer

    Mam,
    Will abatement do applicable in case of providing renting on immovable properties service?

  49. By s.veeraraghavan

    Madam,

    We are a PSU Company and appointed a individual as liaison agent for procuring institutional orders /collection For his service we are paying a liaison agent fees on sales value.The agent is not registered under service Tax and raising bill for his service only Please clarify whether we need to pay service tax after payment of his bill. Will it qualify for cenvat input.

  50. By bhardwaj

    We are a firm dealing in jobwork and in negative list whether we are liable of ST on reverse charge and whether we can avail input credit on rent paid for our premise in case of reverse charge Service tax liability.

  51. By Daulat Dadhich

    1. Can a company take service tax credit (including under reverse charge), if address on the invoice is not correct or not match with register address.

    refer notification or clarification if any.

  52. By Shinde

    A proprietor dealing in business of manpower supply to corporate and non corporate entities also then the turnover of 10 lakhs has to be clubbed from both corporate and non corporate entities for service tax as for corporate entities they the corporate is paying service tax. so if the turnover is less than 10 lacs for non corporate entities then whether he should charge service tax

  53. By Deepak

    Dear Sir,

    We are receiving labour charges bill in our company on which some of the service provider have not charged service tax as their income is below threshold limit of Rs. 10 lacs. Are we required to pay service tax on such bills under reverse charge mechanism?

  54. By pradeep

    Hi,

    If service tax paid on the legal services received to the business entity for turnover less than 10 lacs. then cenvat credit is available.

    My case – law firm (service provider) provide legal services to me (entity) and my company is incorporated in dec 15 and no business till yet. we have already paid service tax on 31st march 16. can be take cenvat credit or not.??

    Your advice are so valuable and appreciable.

  55. By prabhakar sinha

    in service tax if consignment note is not received by service receiver what should he do?

  56. By Priyanka Chauhan

    Under complete reverse charge mechanism,do invoice amount be inclusive or exclusive of service tax? Is it necessary to show service tax amount on invoice even if it is paid by service recepient?
    suppose i render service of Rs 114 inclusive of service tax, should invoice of service provider under complete reverse charge be 114 or Rs 100?

  57. By shubham

    Mam, it has come to my knowledge that there are some changes in ST RCM… please tell me If my Gross Mutual Fund commission receipt is less than 1 lac per year and gross general insurance commission receipt is more than 10 lacs per year, then will I be liable to pay ST as per new rules applicable from 1-4-2016 … thanks in advance

  58. By K Purushothaman

    The rate of service tax payable by the receiver and supplier on video production

  59. By satya

    Pl let me know is RCM applicable for state govt. Corporations ?or only for Companies?

  60. By babu

    We are receiving services from our holding company established in UK. Kindly let me know whether we need to pay any service tax on reverse charge mechanism. If we pay shall we avail input credit on the same

  61. Hello Madam,

    I am working with an MNC company based in Delhi, our company profile is Facility/Property management.

    We having contract with Individual who providing service of Façade cleaning. (Manpower Supply)

    As vendor is proprietorship so he come under RCM and will not charge Service tax. Services Tax will be fully paid by my company.

    Question is that my company forcing vendor to convert in Pvt. Ltd.

    on what based my company can tell vendor to convert in Pvt. Ltd? What benefits will get my company as well as vendor.

    Regards
    Raj

  62. By chanda sumanth

    can u pls share the citation of Om Tea Company as i am unable to find it both in Excus as well as in TIOL

  63. By navy

    Hello,
    I work in a design agency. If we outsource a particular task (in this case booking air tickets for our team through an external travel agent) and this travel agent send us a bill inclusive of service tax. Now when we raise this invoice to our client, should we add another service tax on the total amount that travel agent is charging us ?

  64. By Shivkamal soni

    SERVICE TAX BILL PERTAINING TO APRIL 2014 BASED ON RCM ,I WOULD LIKE TO ENTERED IN SERVICE TAX RETURN for period OCT TO MARCH 2015 ,BUT HOW PLEASE GUIDE ME

  65. By SAIYAD JAMEELUDDIN

    I AM DOING SMALL WORKS AND NOT COMING UNDER SERVICE TAX.I AM DOING GYM MAINTENANCE FOR A PUBLIC LTD FIRM..I DONT HAVE SERVICE TAX NUMBER.BUT STILL THEY ARE PAYING SERVICE TAX ON MY BEHALF ON FULL BILL AMOUNT.IS IT OK

  66. By Neeraj Joshi

    I m working in a Pvt Ltd who is a Service Tax assesse. & I made 1 payment of Rs. 12000 to sales tax consultant who is a advocate for his professional fees. now my question is should I deposit 100% S.Tax on this service under RCM. & also clear that, can I take input credit of this S.Tax paid.

  67. By Ashutosh

    Respected mam,
    what is the benefit of reverse charge to government?

    • By admin

      As per my understanding, due to reverse charge possibility of service tax compliance increases. Because there are two parties where department can cross check.

      • By REJIMON RAJU

        if a company paying rcm in the copacity of Service receiver is it able to take the input …?????

      • By admin

        Service tax paid under reverse charge mechanism is available for cenvat credit if the service received is included in definition of input service. Please go through the article. I have mentioned about it.

  68. By mritunjay

    Our clint bsnl paid reverse service tax on hiring of vehicles. Can they avail as cenvet.

    • By admin

      Service tax paid under reverse charge mechanism is available for cenvat credit if the service received is included in definition of input service.

  69. By uday kant pathak

    IS RCM APPLICABLE WHEN RECEIVED RENTAL INCOME BETWEEN ANY PVT LTD CO.

    • By admin

      If two corporate are doing transactions, RCM will not be applicable. Other point is that Rent service is not covered under RCM.

  70. By Amit S

    Respected Mam,

    I am proprietor of proprietorship business of providing loans against vehicle. Since we do not have any Trading activity, we don’t prepare Trading account. Also, in financial terms, we only have income & expenditure heads in P & L account. There is non-applicability of word “Turnover” in our business. However, the interest income booked in P&L is above 10 Lacs for FY 2014-15 as well as 2015-16.

    We have availed legal service from various individual advocates amounting Rs.45,000 through the FY 2015-16.

    Are we covered under RCM? Please clarify the reason in either way of solution.

    • By admin

      As your turnover is more than 10 Lakhs, you are liable to pay service tax under RCM for legal service – 100% service tax. solution is get registered under service tax act and pay service tax.

  71. Khatri Saheba you are really doing good job by providing such important and valuable guidnace on service tax matter without any fees. All of us( reader) are very thank full to you. R M.Khan

  72. By Vivek

    Dear Madam
    I want to know that service provider needs to register under ST and needs to file return or not in following case
    My one of client providing architect service to three companies and receiving professional fees which is above Rs.10 lakhs. Other than above he is not doing any other consultancy. Under RCM companies pay ST on professional fees. But my question is my client is also need to register under ST or not ? He has to file return or not ?

    • By CA Tarannum Khatri

      Vivekji,

      One point is that artchitect service is not under reverse charge so your client is liable to charge and pay service tax.

      Other point, if any other case, when reverse charge is applicable 100% , service provider can get small service provider exemption and he is not required to register under service tax. Whole service tax will be paid by service receiver directly to government.

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