Income tax

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NARESH

NARESH (Querist)
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08 November 2012 what is meant by reverse charge mechanism?

CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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08 November 2012 There is No Concept of recerse Charge mechanism in Income Tax.

If You are asking for Service Tax, Then Let me Know.

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CA Prashant Gupta

CA Prashant Gupta (Expert)
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08 November 2012 Reverse Charge mechanism is in Service Tax.
govt applies this for proper receipt of service tax. in this some services are bring to under this mechanism.
when a person pay for these services he need to depsoit a certain % of service tax on this service to government. rest part will be paid by service provider.
So if service provider is not giving tax then he will be caught by details provided by service receiver.
but one problem is it is applicbale when service provider is not liable for service tax. in this service receiver will deposit service tax to govt till that fixed %. which is excess service tax receipt by govt while service tax provider is not liable to pay service tax on it.

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CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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08 November 2012 dear prashant first u said rest part will be paid by service provider, & than you are saying this is applicable when service provider not in st ambit.. its creating confusions to me.
pls clarify some.

CA Prashant Gupta

CA Prashant Gupta (Expert)
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08 November 2012 CA Lokesh
if service provider is individual labour contractor and his earning in year is 4-5 lac. then he is not liable for service tax. but when company is getting his services then due to reverse charge mechanism company need to pay 75% of service tax. But as he is not registered in service tax he will not paid rest 25% of service tax.
I think now matter is clear

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