Service tax

50% reverse charge in works contract service: Thus section 68(2) empowers Central Government to impose partial reverse charge in any service. Under the works contract service partial reverse charge to the extent of 50% has been imposed subject to certain conditions.

In works contract service 50% of service tax will be payable by service receiver and 50% by the service provider if the following conditions are satisfied:

1.   Provider of works contract service is an individual, HUF or partnership firm, whether registered or not, including Association of persons, located in the taxable territory and,

2.   Such works contract service is provided to a business entity registered as body corporate, located in the taxable territory.

Thus both the above conditions must be satisfied before reverse charge mechanism is to be applicable in works contract service.