Reverse charge mechanism

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 May 2013 If service receiver has no income...and he availed the service of advocate..then under RCM whether he has to upload return of service tax eventhough he incurres nil income..

In short,whether service receiver is liable to make return of service tax eventhough he is not generating any income?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

31 May 2013 Services provided by an individual advocate or a firm of advocates or Arbitral Tribunal to non-business entities (like individuals, charity organizations, etc.), or to a business entity with turnover of less than Rs. 10 lakhs per annum, are exempt.
In case of services provided by an individual advocate or an advocate firm or Arbitral Tribunal to business entity with turnover exceeding Rs. 10 lakhs per annum, the business entity is liable to pay service tax under reverse charge mechanism.

“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’.

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