Reverse charge

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2012 There is an educational institution (with the main object of education) which on the direction of MHRD, Govt. of India has setup a National Library. Grant in Aid received from GOI and fixed annual contribution towards cost of procurement of online journals or subscriptions received from other member institutes.

For procuring those online journals / subscriptions the institute is paying to foreign vendor’s amount in foreign currency.

Now my question is whether service tax will be applicable under the reverse charge.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 May 2012 Dear Author,

you are liable to pay service tax on reverse charge basis, there is no exemption available to such organisation under reverse charge mechanism.

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2012 But Sir, As per Taxation of Services (Provided from Outside India and Received In India) Rule, 2006, Online Information and Database Access And / or Retrieval Services are covered in such rules, if the following two conditions are satisfied:

(a) Such taxable services are received by a recipient located in India
(b) Such taxable services are for use in relation to business or commerce.

And in this case the above said is used for education

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 May 2012 This provision is not applicable in case of individuals who have received such service other than for the purpose of use in business or commerce

It is exempt only if it is availed for personal purpose and that too by an individual.
In your case, it is an educational institution. Accordingly, you are liable for ST.

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2012 Individual is no where mentioned in the abovesaid rule

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 May 2012 Please read clause no.7.1 of the link

http://www.servicetax.gov.in/st-proc-home.htm