Reverse charge payment

As per POT, Rule 7, ST liability would ariase on making payment to party if u make the payment within three months from the invoise date. 

If the payment is not made within 3 months to service provider, then your liability would arise immediately the next day. i.e 91st day.

If you pay after 6 month, you can record only payment entry. ST liability entry should have been made on reaching three months itself.

Supply of manpower or security services

• Services by way of supply of manpower for any purpose or security services.
• Service provider may be an individual, HUF, partnership firm or AOP.
• Service receiver should be a business entity registered as body corporate.
• Service provider and service receiver should be located in taxable territory.
• Liability of service receiver is 100% of the amount of service tax.
• Not applicable when service provider is a body corporate.
• Point of Taxation – Date of Payment of invoice or 3 months from date of invoice - whichever is earlier.
• Service tax paid on reverse charge also eligible for cenvat credit on the strength of challan.
• Service tax payable on reverse charge cannot be paid through cenvat credit a/c.
• Whether the benefit of Exemption for Rs. 10 lakhs available to service receiver - NO, It will not be applicable to assessee paying service tax under reverse charge mechanism (N.No.33/2012).

thanks & regards

Arpit Verma