07 September 2012
The liability of the service provider and service recipient are different and independent of each other. Thus in case the service provider is availing exemption owing to turnover being less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient shall have to pay service tax which he is obliged to pay under the partial reverse charge mechanism. This is the explanation by the Finance ministry.
E.g X service provider of man power service. His bill value is Rs.10,000.00 he has not collected any service tax because he is in the below limit.
For this bill, service receiver, being a company has to calculate 75% of the bill amount and to pay 12.36% on this to the Govt.
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