Reverse charge mechanism (rcm)
Vardan Singh Sengar (Accounts Manager in Private Company) (433 Points)
13 July 2013
5 Replies
Vinod Lakhera
(CA in service)
(85 Points)
Replied 13 July 2013
Service tax is a indirect tax. Where service provider is required to collect service tax from the service recipient and deposit the tax to govt.. However there are few exception to this, where instead service recipient is required to deposit the tax amount... Sec 68 of finance act provides this....eg insurance agent provide service to insurance cos, but jus bcoz of reverse charge mechanism insurance cos deposit the st amt...
vikas
(student )
(139 Points)
Replied 13 July 2013
Reverse Charge Mechanism in service tax is not a new concept. Under this scheme, service tax is payable by service recipient instead of service provider . Under this charge service receiver have to register himself under service tax . Further service receiver can not claim general exemption limit of 10 Lakh rupees. So he has to pay even on few rupees of service received
It will be very harsh on service receiver end where he has received services falls under reverse charge for only few hundred rupees but due to it he has to register himself in service tax and have to file service tax return on prescribed interval.Moreover under service tax act Nil return is also mandatory and every registered person have to file half yearly return
However, this reverse charge under above mentioned three services will be applicable only if, the service provider of these 3 services is an Individual or HUF or Proprietary or partnership firm or AOP and the service receiver is a Company registered under Companies Act, 1956
1 supply of manpower or security services
2 works contract
3 import of service
4 provided or agreed to be provided by a director of a company to the said company
5 services provided or agreed to be provided by an arbitral tribunal ,individual advocate
6 insurance agent and GTA
7 services provided or agreed to be provided by way of sponsorship
8 services provided or agreed to be provided by way of support service by Government or local authority
Vardan Singh Sengar
(Accounts Manager in Private Company)
(433 Points)
Replied 13 July 2013
can a service receiver claim the cenvat credit for the s.t he is paying..can u give a numerical solved e.g. of both a service provider and a receiver??
Arun Kumar Singh
(GST Advocate)
(15220 Points)
Replied 13 July 2013
Dear Vardan,
Service provider and manufacturer can take the cenvat credit on duty paid under reverse charge system.
Vardan Singh Sengar
(Accounts Manager in Private Company)
(433 Points)
Replied 14 July 2013
ohk. thanks a lot for all
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