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Reverse charge mechanism on manpower recruitment

Gourav Choudhary (CA and CS finalist) (143 Points)

28 October 2012

Gud evening friends, Have a small query relating to applicability of reverse charge mechanism. My client is a sole proprietorship firm engaged in recruitment/supply of man power on permanent basis. Whether the provisions of reverse charge mechanism will be applicable on it and if yes at what rate service tax will have to be paid by thevservice provider?

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5 Replies

CA Sahil Singla.. (Service Tax ) (3746 Points)
Replied 28 October 2012

Yes. Partial Reverse charge is applicable since your firm is proprietorship. The tax is to be paid at the rate of 12.36% on 25% of invoice value.

Gourav Choudhary (CA and CS finalist) (143 Points)
Replied 28 October 2012

Thanks Mr. Sahil for your valuable reply. My client has already paid service tax @ 12.36% for the period July to Sep 2012 and now the parties are claiming refund of amount in excess of 25% so that they can remit it to govt. in their account.

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 29 October 2012

Reverse tax is applicable when service provider is individual/partenrship and service receiver is body corporate. Ratio is 25% : 75 %

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 29 October 2012

Originally posted by : Gourav Choudhary
	Thanks Mr. Sahil for your valuable reply. My client has already paid service tax @ 12.36% for the period July to Sep 2012 and now the parties are claiming refund of amount in excess of 25% so that they can remit it to govt. in their account. Wht is the option left with my client in the current scenario?