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Reverse charge mechanism exempted services

Naga Praveen (Chartered Accountant) (304 Points)

15 March 2013

Hi I would came to know that the services of Health care is exempt under negative list, I would like to know for the import of Services the a which is exempt from service tax for health care services is liable to pay tax under reverse charge mechanism?

Please clarify

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6 Replies

TKKKKKK (PRACTICING CA) (3268 Points)
Replied 16 March 2013

NO IT WILL BE NOT TAXABLE. BECAUSE IMPORT PAY TAXES AS HE IS PROVIDING THAT SERVICE IN INDIA. AS SERVICE IS EXEMPT,HE IS NOT LIABLE TO PAY TAX AS IMPORTER.

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Sunil (Trader) (2611 Points)
Replied 19 March 2013

Health Care Service is exempt but if you receive any non exempt service as an input for your exempt service, the same is not exempted. As far as cross border services is concerned, all services whether exempt or not if received by a receiver in taxable territory (India other than J&K) from a provider in non-taxable territory (J&K and outside India) and if it is used in your business (even of providing negative list services) you have to pay tax on reverse charge mechanism.

Sunil (Trader) (2611 Points)
Replied 20 March 2013

If you read Section 66B first then exempt service received from out of India or J&K should not be taxable. If you read Section 68(2) reverse charge mechanism is applicable when taxable service is received from abroad and that is also stated in notification 30/2012

However, ther is a notification 15/2012 that is apparently not rescinded that is silent about whether the service is taxable or not and brings all services availed outside under the tax net. Usually the later notification should supercede the earlier ones.

TKKKKKK (PRACTICING CA) (3268 Points)
Replied 20 March 2013

in notification 30/12 ,it is clearly stated in the head 'taxable service" .so notification is for taxable service not for exempt service. so on importation of exempt service tax is not payable.

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Sunil (Trader) (2611 Points)
Replied 20 March 2013

Yes Tarannum. On importation of exempt service no service tax is payable. BUT, on importation of taxable service, Service Tax is payble by receiver even if the service he provides is not taxable. This means if for export of service you receive an input from abroad, you can pay tax and then claim refund if you satisy ALL the conditions for export of the service. However, if you provide exempt service in taxable territory you have to pay on import of taxable service and you cannot claim refund for it.

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Ghanshyam Gangji (Article Assistant) (52 Points)
Replied 12 December 2015

Hi Guys,

My Name is Ghanshyam,

Please Can anybody help me out on this issue?

There is an entity which has partneship with NSDC(a govt. undertaking). It means its services are exempted.

The entity has availed certain Vehicle Hiring Services from a non-company. Will these services attract service tax to the service recepient (the entity) under reverse charge mecahnism?

If Yes, then is there any abatement available?

Regards,

Ghanshyam