Tag: reverse charge mechanism rate

Current service tax rate chart for year 2014-15

Presenting current service tax rate chart for year 2014-15. You can find service tax rate chart 2015-16 with amended rate 14% here.- LINK. The new rate is applicable from june 1, 2015. Service tax is indirect tax levied on service provided. Service tax is charged at various rates due to availability of exemptions and abatements on various services. Use this chart to decide service tax rate applicable to you. There is change in service tax rate from 12.36% to 14% in budget 2015-16. Read following posts,  budget highlights: service tax  When will new service tax rate 14% be applicable?...

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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...

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