Reverse charge mechanism

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 June 2013 under Reverse Charge Mechanism:

1) Whether S.Tax paid by the service receiver can be claimed as service tax input credit by the service receiver
2) Whether the service provider can claim as refund if he is not supposed to service tax registration
3) How to deposit the tax in what head in service receivers books
4) Any special return has to be filed
5) Any certificate to issue to that person i.e service provider

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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13 June 2013 1.Yes Service tax paid by service provider under reverse charge method can be claimed as service tax input after payment subject to eligibility under CENVAT credit rules . ( but this input cannot be used for payment of service tax on reverse charge method, service tax on reverse charge always paid by cash only)

2.For reverse charge of service tax applicability, no exemption apply, service receiver need to pay what ever service received under reverse charge method

3. Service tax on reverse charge method also need to pay based on particular service category only. Ex: incase Transport charges need to select GTA category only for payment

4.No need to file any special return. normal half yearly return of ST-3 only need to file. ST-3 has option to incorporate your reverse charge service tax details

5. No need to issue any certificate to service provided by service receiver

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Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2013 in case of car hire charges under which head do we deposit tax in service receivers book?

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Ganeshbabu K

Ganeshbabu K (Expert)
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14 June 2013 Rent a cab service,

Applicablity and some provisions,

1)Service Provider should be HUF, Individual, firm

2)Service receiver – Business entity registered as body corporate

3)Tax on 40%, if Cenvat credit is not availed by the service provider – No Cenvat credit in most of the cases – hence cost to company.

4)If motor vehicle is taken on hire (operating lease) without driver, it is ‘transfer of right to goods’. Then it is deemed sale of goods and Vat will apply – not service tax.

Thanks & regards
Ganeshbabu k