Reverse Charge Mechanism


As we all are aware, Service Receiver also needs to pay his % of  service tax under Reverse Charge Mechanism.Here is the updated list for know the % share of Service Receiver and Service provider in order to have better control over on the payments of statutory dues.

Sr no. Nature of Services Service Provider Service Receiver
Person % Sharing of Tax Person % Sharing of Tax
1 Insurance Agent Services ANY Nil Any 100%
1A Recovery Agent Service (11.07.2014) ANY Nil Banks/FI
1B Services provided by a mutual fund agent or distributor, to a mutual fund  or
asset management company (w.e.f. 01-04-2015)
ANY Nil ANY 100%
1C Service provided by a selling or marketing agent of lottery tickets to a
lottery distributor or selling agent (w.e.f. 01-04-2015)
ANY Nil ANY 100%
2 Transport of goods by Road   (30% Taxable) (w.e.f. 01-04-2015) Any (Except Individual) Nil Any (Except individual) 100%
3 Sponsorship Services Any Nil Firm or Company 100%
4 Service by Arbitral Tribunal Tribunal Nil Any 100%
5 Advocate Services Ind./Firm Nil Any (Business Entity
Ser. T/o > 10 lacs)
5A Service by Directors Individual Nil Company/ Body Corporate 100%
6 Services by Government or Local Authority(except renting Service) Govt. or local authority Nil Any (Business Entity) 100%
7 Renting of Motor vehicle for passenger
A If No Abatement taken(01.01.2014) Ind./HUF/Firm/ AOP (50%) Company (50%)
Earlier Rate was 60% for SP and 40% TO SR
B If Abatement is taken( Eligible for 40% Service Tax Payment) Ind./HUF/Firm/ AOP Nil Company 100%
8 Supply of Manpower we.f 01-07-2012 Ind./HUF/Firm/
Nil Company 100%
Securities Services w.e.f 07-08-2012
Before 01-04-2015 , Rate was 25% to SP and 75% To SR
9 Works Contract Services (on which VAT is leviable)
A Works Contract in relation to Original Work Ind./HUF/Firm AOP (50%) Company (50%)
( Eligible for 40% Service Tax Payment)
B Other  than  above  (9A)  Works  Contract  like Repairs or Maintenance, etc. Ind./HUF/Firm/ AOP (50%) Company (50%)
( Eligible for 70% Service Tax Payment)
10 Import of Services Any Nil Any 100%
11 Service provided or agreed to be provided by a person involving an Any Nil Any
aggregator in any manner



Point of Taxation


Thus, effectively as per said Rule, Point Of Taxation of services under Reverse Charge is the date of payment of Invoice  or in case  invoice not paid with in six month months, the point of taxation would be the date of invoice.


After Amendment


Union Budget 2014-15 has amended the first proviso of Rule 7 to provide that point of taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier.



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About CA Deepak Rathore

CA Deepak Rathore

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