Reverse charge mechanism

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Querist : Anonymous

Querist : Anonymous (Querist)

27 December 2013 Dear CCI Members,
I need to pay royalty charges to a statutory body , who shall pay the service tax under tax under reverse charge mechanism . we or the statutory body ? If it is we who need to pay service tax what is the percentage of payment ?

Annu Agarwal

Annu Agarwal (Expert)
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28 December 2013 In the instant case Statutory body shall raise an invoice on you.In case of reverse charge mechanism you shall pay 100% service tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2013 Pay 100% to the statutory body or to the service tax department directly and file the service tax return.

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Annu Agarwal

Annu Agarwal (Expert)
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28 December 2013 Pay 100% service tax to service tax department.

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Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2013 Thank you Annu Agarwal! Can you send me the link or any notification no stating the above facts.Since it is statutory body everything needs to be documented .

Annu Agarwal

Annu Agarwal (Expert)
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31 December 2013 Dear Sir
Please note:
1.why is royalty taxable:As per Section 66E(c).
2.When is reverse charge applicable:When the service provider ( in your case the statutory body) is located in a non-taxable territory and service receiver( that is you) are located in a taxable territory.
Refference:Point (B) Notification No.30/2012.
3.If the statutory body is located in India in taxable territory then you just need to pay the invoice value inclusive of service tax to that statutory body and not to the service tax authority.

Hope this helps.

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