Reverse charge mechanism application

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This query is : Resolved

Brij katara (Querist)

27 June 2012 Abn individual advocate is rendering services to a body corporate. This advocate is not required to get registered under service tax rules. whether body corporate is required to pay setrvice tax according to reverse charge mechanism as the service provider is exempt.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)

27 June 2012 1. Under reverse charge mechanism, the exemption available to the service provider is NOT available to the service recipient.

2. Accordingly, the corporate entity shall be liable to pay service tax in this case.

However, if the gross receipts or turnover of the service RECIPIENT (corporate entity) did not exceed Rs. 10 lakhs in the previous year, then service tax is exempt.

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RENGARAJ R.K

RENGARAJ R.K (Expert)

27 June 2012 Yes, individual advocate is not responsible for paying service tax. Under reverse charge mechanism, the liability of paying service tax on such bills is shifted to corporate entity, being the service receiver. There are ten such services included in the current bill which comes into effect from 01.07.2012, the service receiver has to pay either full or part % on such services.

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