In the normal scenario, supplier is liable to pay tax on supply of goods or services or both but reverse charge is the situation where recipient is liable to pay tax i.
When will service recipient need to the service tax in respect of his part of liability? In case, value of service is not paid within prescribed 6 months period, service tax would become payable as per rule 3 of POT rule.
X provided services to Mr. The date of invoice is Y made payment to Mr.
Therefore, the liability to pay service tax on part of Mr. Y will arise from the date of payment to Mr. Y is liable to pay service tax by Therefore, the liability to pay service tax will arise from No, this will not be available for liability to be paid by Service Recipient under Reverse Charge Mechanism in term s of Notification no.
He is required to pay the amount in cash only. The service provider is required to charge only that on the invoice for which he is liable to pay.
He is willing to give an undertaking in that regard. In that case, do service receiver is liable to pay service tax? Yes, because only person who is liable to pay service tax should pay the same and no one can undertake such responsibility.
Furthermore, please refer details and applicability of new reverse charge mechanism in case of all the services as mentioned in the table below: Point of taxation is normally the date of payment but, if payment is not made within 6 months from date of invoice then Point of taxation would be date of invoice, which will results in demand of service tax from the month in which invoice is raised.
Hence, there might be demand of interest by the Service tax dept on late payment of service tax. Further, it would be pertinent to note that payment of service tax beyond 6 months under reverse charge would not be available as Cenvat credit though it is inputs service for the Service Recipient [c1].Service Tax Reverse charge mechanism.
To understand what is a reverse charge mechanism in service tax first we need to be aware of normal service tax.. As per section 68(1) of the Finance Act, , every person providing taxable services to any other person shall pay service tax at the rate specified in section NEW DELHI: The government has further deferred the reverse charge mechanism under goods and services tax to September Under this mechanism, GST is levied on goods or services procured from unregistered dealers by the buyer and deposited with the government.
Reverse Charge mechanism is a system to monitor and increase the tax coverage, compliance and synchronization and track ability amongst unorganized, partly organized and fully organized sectors. Generally, the supplier of goods or services is liable to pay GST.
The revenue department has decided to keep in abeyance GST provisions relating to reverse charge mechanism, tax deducted at source (TDS) and tax collected at source (TCS) for .
Reverse Charge Mechanism under Service Tax Introduction Generally, liability to pay service tax is of the person providing taxable services, so. The reverse charge mechanism stems from a complex set of EU-wide regulations which govern the ‘place of supply’ of certain goods services sold and purchased internationally.
In brief, for many electronic services, including online advertising, the place of supply is determined to be wherever the customer is based, not the supplier, AdWords.