Reverse charge

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This query is : Resolved

Rajib Saha (Querist)

03 February 2016 Ours is an Educational Institution having huge Campus. Recently, we have engaged a Civil Contractor to execute certain civil construction job inside the campus- contarct value more than Rs. 10.00 Lakh. My query:

1. Whether we are liable to pay service tax under Reverse Charge Mechanism.
2. If yes, how much?
3. Can the Civil Contractor compel us to pay Service Tax

Neljo Davis ACA

Neljo Davis ACA (Expert)

08 February 2016 Reverse Charge Mechanism will be applicable if the works contract service is provided by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons to a business entity registered as body corporate.

“Business entity” means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession. Thus, Government, charitable organisation is not ‘business entity’.

1. If the service provider and service receiver falls under the above respective categories reverse charge mechanism will be applicable.
2. 50% service tax is payable by service provider and 50% by service receiver
3. If the Reverse Charge Mechanism is applicable, service receiver is legally liable to pay.

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