10 December 2013
we are registered co. in Goa India, but wholly owned subsidiary by UK co. we have given a contract to supply security to a proprietor firm and who is charging us 25% of service tax . since we are owned by uk co. are we liable to pay balance 75% of service tax under RCM.
20 July 2025
Yes, you are liable to pay the remaining 75% of service tax under Reverse Charge Mechanism (RCM) under the Service Tax provisions applicable prior to GST (before 1 July 2017), provided certain conditions are met.
✅ Here's the Explanation: 1. Service Type:
You’ve availed security services from a proprietorship firm — this falls under services notified for partial reverse charge mechanism as per Notification No. 30/2012-ST, dated 20.06.2012.
🧾 Reverse Charge on Security Services (Pre-GST): Service Service Provider Service Recipient RCM Ratio Security or Manpower Supply Individual/Proprietor Company (registered in taxable territory) 25% by provider, 75% by recipient 🔄 As per Notification 30/2012-ST, amended by 45/2012-ST, 75% service tax was to be paid by the recipient, if the provider is an individual, HUF, partnership, or AOP, and recipient is a body corporate. ⚠️ Your Case: You are a body corporate (Private Ltd Co in Goa). Service provider is a proprietor (individual). You are registered in India. Service provided: Security Service — covered under partial RCM. ✅ Therefore, you must pay 75% of the applicable service tax under RCM, and the service provider charges 25%.
❓Does Being a Subsidiary of a UK Co. Change Anything? 🔸 No — the fact that you are a wholly owned subsidiary of a UK company does not exempt you from RCM. As long as:
You are located in India and The services are received in India, Then Indian Service Tax law applies fully.
🧾 Accounting & Payment: You must pay your 75% share of the service tax in cash (not through CENVAT credit). You can avail CENVAT credit (subject to rules) on the service tax paid under RCM. ✅ Conclusion: Yes, your company is liable to pay 75% of the service tax under RCM, even though the service provider is charging 25%. Your foreign ownership does not affect your domestic tax obligations in this case.
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