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Reverse charges machanism of security agency services

santhos kumar (Audit Manager) (59 Points)

17 October 2012

Dear Members

One of my client - Partnership firm receiving secuirty services from an Agency - Private Limited company.

In this case, whether service receiver is liable to pay 75% of the service tax liabilty.

And if liable to pay the 75%, whether we have to register with the service tax - security agency.

Thanks & Regards

Santhos Kumar.s

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10 Replies

CA Pooja Agarwal (Chartered Accountant) (3228 Points)
Replied 17 October 2012

yes the service receiver has to pay 75% of servive tax laibility directly ot the goverment under partial reverse charge mechanism and also has register with service tax department

(Guest)

The person who is liable to pay service tax is liable to get registered under service tax. It holds good for service recipient too.

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 17 October 2012

Partial Reverse Charge is Applicable When Service Receipients is Corporate.

Both Service Provider & Receipient Liablity is Different.

in Your Case, Service Provider Company Will Charge 25% of 12.36 Service Tax Only If They are Not Claiming SSP Exemption.

Further Your Liablity is NIL, Read With covered under reverse charge mechanism from 7th

August, 2012 vide Notification No 45/ 2012- ST and 46/ 2012- ST dated 7th August, 2012.

CA Pooja Agarwal (Chartered Accountant) (3228 Points)
Replied 17 October 2012

well i think any business entity is liable to pay tax under partial reverse charge mechaism

CA Manish (Job) (5264 Points)
Replied 17 October 2012

Security agency Service is covered under Supply of Manpower service.

Partial Reverse Charge will apply if a supply of manpower service is provided by

i) any individual

ii) HUF

iii) Proprietary firm

iv) partnership firm

v) Association of Persons

located in the taxable territory

i) Any company registered under the Companies Act

ii) business entity registered as body corporate

located in the taxable territory.

Therefore in your case partial reverse charge is not applicable as the firm is receiving service.

1 Like

Ravi Nallipogu (Student ) (128 Points)
Replied 17 October 2012

As per new service tax regime partial reverse charge taxability

S No	Descripttttion of Service	Service Provider	Service Receiver	Service Provider Liability	Service Receiver Liability	Remarks
1	Hiring /Renting of car for carry passengers
	A)With abatement of 60%	Any Person other than corporate entity	Body Corporate	NIL	40%	Receiver not engaged similar line of business .Notification No .26/2012dated 20^th june ,2012.and Notification No.30/2012 dated 20^th june,2012
	A)With abatement of 60%	Corporate entity	Body Corporate	40%	NIL
	B)Without abatement	Any Person other than corporate entity	Body Corporate	60%	40%
	B)Without abatement	Corporate entity		100%	NIL
2	Supply of Man power in any manner (Including security Agency services)	Any Person other than corporate entity	Body Corporate	25%	75%	Appliacability from 7th aug 2012
2		Corporate entity	Body Corporate	100%	NIL	Appliacability from 7th aug 2012
3	Execution of Works Contract	Any Person other than corporate entity	Body Corporate	50%	50%	Valuation of works contract Notification No 24/2012-ST dated 6^th june ,2012 Movable property : Execution of Original work is 40% Maintenance or Repair is 70% Immovable Property : other than above work is 60%
3	Execution of Works Contract	Corporate entity	Body Corporate	100%	NIL

2 Like

Pradeep Nainawati (ACA) (496 Points)
Replied 17 October 2012

I agree with Mr. Ayush. There will be no liability on service receiver under partial reverse charge as service provider is body corporate.Kindly refer to extract of Rule 2(d)(i) of service tax rules 1994 below.

(F) in relation to services provided or agreed to be provided by way of :-

(a) renting of a motor vehicle designed to carry passengers, to any person who is not engaged in a similar business; or

(b) supply of manpower for any purpose; or

(c) service portion in execution of a works contract-

by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as a body corporate, located in the taxable territory, both the service provider and the service recipient to the extent notified under sub-section (2) of section 68 of the Act, for each respectively.

1 Like

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 17 October 2012

Originally posted by : Ravi Nallipogu
	As per new service tax regime partial reverse charge taxability S No Descriptttttion of Service Service Provider Service Receiver Service Provider Liability Service Receiver Liability Remarks 1 Hiring /Renting of car for carry passengers A)With abatement of 60% Any Person other than corporate entity Body Corporate NIL 40% Receiver not engaged similar line of business .Notification No .26/2012dated 20th june ,2012.and Notification No.30/2012 dated 20th june,2012 Corporate entity 40% NIL B)Without abatement Any Person other than corporate entity Body Corporate 60% 40% Corporate entity 100% NIL 2 Supply of Man power in any manner (Including security Agency services) Any Person other than corporate entity Body Corporate 25% 75% Appliacability from 7th aug 2012 Corporate entity 100% NIL 3 Execution of Works Contract Any Person other than corporate entity Body Corporate 50% 50% Valuation of works contract Notification No 24/2012-ST dated 6th june ,2012 Movable property : Execution of Original work is 40% Maintenance or Repair is 70% Immovable Property : other than above work is 60% Corporate entity 100% NIL

Can You Post This in Attaching Excel/Wrd File.

Tejas Shah (Deputy Manager ( Finance & Accounts )) (211 Points)
Replied 18 October 2012

Originally posted by : CA Manish Malu
	Security agency Service is covered under Supply of Manpower service. Partial Reverse Charge will apply if a supply of manpower service is provided by i) any individual ii) HUF iii) Proprietary firm iv) partnership firm v) Association of Persons located in the taxable territory to i) Any company registered under the Companies Act ii) business entity registered as body corporate located in the taxable territory. Therefore in your case partial reverse charge is not applicable as the firm is receiving service.