Reverse charge mechanism

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 I have a query regarding service tax reverse charge mechanism, We are a infra project company taken composite scheme of works contract, We have given contract of construction to subcontractor, but he doesn't have service tax registration or vat registration, whether we require to pay service tax on services availed from subcontractor or not ? please suggest.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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06 December 2012 The liability of the service provider and service recipient is independent of each other.

The service recipient is liable to pay service tax under reverse charge even if the service provider is not liable to pay such tax.

Accordingly, in the above case, you are liable to pay service tax even though the service provider is not registered.

Querist : Anonymous

Querist : Anonymous (Querist)

06 December 2012 Then what percent ?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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06 December 2012 In case of works contract 50% of the Service tax is payable by the service recipient.

So you will pay service tax @ 6.18%.

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