Bhupendra

Rohilla

WELCOME

TO THE

ROADMAP OF

SERVICE TAX
REVERSE CHARGE MECHANISM

Bhupendra
Rohilla

Types of RC

Conten
ts

Services
covered
under full RC

Meaning of RC

t
f
e
Ben

RC & its
Aspects

Services
covered under
Partial RC

Meaning of Reverse Charge

Bhupendra
Rohilla

Section 68(1) specify that ST in respect of taxable services

shall be paid by the service provider.

Section 68(2) makes provisions for reverse charge.

Meaning of Reverse Charge: Normally ST is paid by the

service provider but in case of notified services, the liability
to pay service tax is shifted from SP to SR subject to the
provisions of section 68(2) read with Rule 2(1)(d) of ST
Rules,1994, it is called Reverse Charge Mechanism.

Types of Reverse Charge

Bhupendra
Rohilla

There are two types of reverse charge:

Full Reverse Charge:

Under the full reverse charge, the liability to pay service tax
on specified taxable service is shifted upon service receiver
in full.
Partial Reverse Charge:

Under the partial reverse charge, both SP and SR are liable

to pay service tax in the portion as specified in Rule 2(1)(d)
of ST Rules, 1994.

Reverse charge and other aspect

RC and Registration

RC and POT

RC and Payment

RC and CENVAT

RC and SSP Exemption

10

Bhupendra
Rohilla

Reverse charge and registration

Bhupendra
Rohilla

Normal case:

As per notification 26/2005 as last amended by notification

no. 9/2008, any provider of taxable service whose aggregate
value of taxable service in a financial year exceeds 9 lakh
rupees shall make an application for registration.
Reverse charge case:

However, if a person is required to pay ST under reverse

charge, it is mandatory to get registered with the department
immediately irrespective of the fact that the limit of Rs 9
lakh has not been crossed.

RC and Point of Taxation

Bhupendra
Rohilla

POT under Normal case:

POT shall be invoice date subject to condition that invoice is

issued in accordance with Rule 4A of the ST Rules, 1994.

If payment is received before the invoice is issued, the POT

shall be date of receiving the payment.
POT under Reverse Charge:

POT shall be date of payment.

If payment is not made within a period of 3 months from the

date of invoice, the POT shall be the 1st day that occurs
immediately after a period of 3 months from the date of
invoice.

RC and Payment of ST:

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Rohilla

Normal case

Service tax liability can be paid through cash/ cheque( Sub.

to realization); or

By using CENVAT credit available (Rule 3(4) (e) of CCR2004).

Reverse Charge case:

ST under reverse charge can be paid only in cash/ cheque.

CENVAT credit cannot be used to discharge ST liability

under reverse charge. (Rule 3(4) (e) of CCR-2004).

RC and availment of Service Tax

Bhupendra
Rohilla

In respect of input service where whole of the service tax is

liable to be paid by the recipient of service, credit shall be
allowed after the service tax is paid.

However in case of partial reverse charge in order to avail

credit, it is required to pay ST and invoice value first.

RC and SSP exemption

Bhupendra
Rohilla

SSP exemption exempts taxable services of aggregate value

not exceeding ten lakh rupees in any financial year from the
whole of the service tax leviable thereon under section 66B.

SSP exemption shall not apply to such value of taxable

services in respect of which service tax shall be paid by such
person and in such manner as specified under sub-section
(2) of section 68 of the said Finance Act read with Service
Tax Rules, 1994.

Services covered under full RC

Bhupendra
Rohilla

Service provided by an insurance agent to any person

carrying on the insurance business.
Service provided or agreed to be provided by GTA to
specified 6 person. Q who is liable to pay ST; Q If person
liable to pay ST is in non taxable territory, then who is liable
to pay ST.
Services by way of sponsorship
to
corporate or
partnership firm.
legal services by an arbitral tribunal, or an individual
advocate or a firm of advocates to any business entity.
Note: If in point No. 2-4, SR is in non taxable territory, the
liability to pay ST shall be on SP.

Services covered under full RC

Bhupendra
Rohilla

Service provided by a person located in non taxable territory

to a person in taxable territory.
Services by a recovery agent to a banking company or a
financial institution or a non banking financial company
NNo. 9/2014- ST.
Service provided or agreed to be provided by a director of a
company or a body corporate to the said company or the
body corporate. NNo. 9/2014- ST.
Support services provided or agreed to be provided by
Government or local authority.

Bhupendra
Rohilla

Partial Reverse Charge

Services provided :
by
Individual
HUF
Partnership Firm
AOI

To
Business Entity
registered as
Body Corporate

Service provider and service recipient both are located in

taxable territory.

Services Covered under Partial RC

Bhupendra
Rohilla

Name of Services
Name of Services
Supply of Manpower or Security SP- 25%
SR-75%
Services
Services of Works Contract

SP- 50%

Renting of motor vehicle to a

person not in similar line of
business:
(a) With abatement
SP- 100%
(b) Without abatement
SP- 40%
(c) W.e.f 1-10-14 NNo.10/2014 SP- 50%

SR-50%

SR-Nil
SR-60%
SR-50%

Questioning Session

Bhupendra
Rohilla

Bhupendra
Rohilla

THANK YOU
Presented By:Name : Bhupendra Rohilla
E-Mail : Bhupenddra.rohilla@yahoo.com
M No. : 9013306492