Dear all,
Please throw some light on Reverse Charge Mechanism in Service Tax.
Thanks,
Pawan
2 Replies
Pritam
(CA)
(95 Points)
Replied 26 December 2007
In certain cases Government may shift the liability of payment of service tax to the receiver of service as a measure of administrative convenience. It is often referred to as ‘reverse charge’ in common
language.
Reverse mechnism means wherein a service receiver is made liable to pay service tax (than a service provider). These principles are laid down u/s 66A of Finance Act.
The reverse mechanism is applicable in the following cases,
1. Goods Transport Agency
2. Sponsership Services
3. Import of Services
4. Insurance Auxiliary Services
5. Mutual Fund
shyam kishor porwal
(Chartered Accountant)
(183 Points)
Replied 26 December 2007
Reverse charge is only the method of recovery the tax from service receiver instead of provider. You can say this is only the transfer of liabilty.
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