Recerse tax mechnism

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ashok thakker (Querist)

20 March 2013 Mine is Proprietorship firm getting service of security supply from Proprietorship firm,will reverse tax mechanism apply here,service provider is enjoying exempt status?

ashok thakker

Sumit Grover

Sumit Grover (Expert)

21 March 2013 It shall not be applicable, since in case of supply of manpower and security guards, the service receiver should be body corporate.... But in you case, you(I.e. Service receiver) are a propertership firm, hence no reverse charge is applicable...(N/N 30/2012 and N/N 45/2012)

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

21 July 2013 If the contract given to a Security agency is clearly for providing security service and the servcie provided is purely security service, it will not fall under the definition of manpower supply. If you are hiring manpower from a Contractor and deploying them for security coverage pr for any other purpose under your superintndence and control, then it will fall under manpower supply liable to reverse charge

For a body corporate, it will be safer to pay 75% under reverse charge to avoid imminent controversies. After all it is not an expenditure as they can take credit of the tax. It has to be remembered that the main objective to bring such services eg. labour supply contractors, security services, small contractors under reverse charge was the innumerable frauds committed by such service providers of not paying the service tax collected to Govt.

Vide Notification No 45/2012 dated 7.08.12, Govt has amended Not No 30/12 dated 20.06.12 so as to include Security services also. Hence reverse charge will be applicable for Security services also wef 7.08.12

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