As per the rule 2(1)(d) of
Service Tax Rules,1994 as amended by
Notification NO.7/2015-ST dated
01.03.2015 effective from 1st April, 2015 there are certain
amendments in reverse charge mechanism. Under reverse charge mechanism now the
rates are changed as well as responsibility of making the payment of service
tax is also changed in few cases. New Services are made taxable for the first
time and taxable through the route Reverse charge mechanism with effect from 01 April, 2015.
CBEC has clarified with Notification No 8/2015 dated 01-March-2015
that ancillary service like loading, unloading, packing, unpacking ,
transshipment, temporary storage etc. provided by GTA along with transport
service are considered as composite service and abatement of 70% is allowed on
these services.
Major Changes effective from 01.04.2015 and related FAQs
are given hereunder:
1. Service provided by
individual ,HUF, proprietary ,firm ,partnership firm to Any Body Corporate registered
as business entity located in taxable territory in respect of services
provided or agreed to be provided by way
of SUPPLY OF MAN POWER for any
purpose or security services.
|
S.No.
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As per the Old Rules
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As per the new rules
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With effect from.
|
||
|
1.
|
Liability
by Service provider(%)
|
Liability
by Service Receiver(%)
|
Liability
by Service Provider(%)
|
Liability
by Service Receiver(%)
|
01-04-2015
|
|
25%
|
75%
|
0%
|
100%
|
||
Then, reverse charge mechanism is
applicable as under.
Note - Body
corporate includes company, LLP,
Cooperative Society But firm,HUF, Trust
are not included as under Body corporate.
Que : If Service provider is a body corporate and service receiver is individual /HUF/ proprietary firm/ partnership
firm then Who will pay the service Tax?
Ans:
As per rule 2(1)d of service tax
rule 1994, service provided by any individual, HUF, Partnership firm,
Proprietary Firm, AOP, located in taxable territory to an Company Registered
under Companies Act or Business Entity registered as body corporate located in
Taxable territory. Then servicereceiver have to pay the full amount of service tax
under reverse charge mechanism.
But in this case ,service receiver is
individual, so, this rule of reverse charge mechanism does not apply and hence, The service provider
i.e. body corporate is liable to pay full(100%) amount of service tax.
Que:
If service provider is body corporate
and servicer receiver is body corporate then Who will pay theservice tax?
Ans: Body corporate i.e. Service
Receiver is liable to pay full(100%) amount of service tax under
Reverse charge mechanism.
Que: If service provider is
individual /HUF/ proprietary
firm ,partnership firm and
service receiver is also a body corporate then Who will pay service tax?
Ans: Body Corporate i.e. Servicer
Receiver is liable to pay full (100%) amount of service tax under Reverse
charge mechanism.
Que: If service provider is individual /HUF/ proprietary firm
,partnership firm and
service receiver is also individual/HUF/ proprietary firm ,partnership
firm then who will pay service tax?
Ans: Individual /HUF/ proprietary firm
,partnership firm i.e. Service provider is
liable to pay full(100%) amount of service tax in this case as reverse charge
mechanism is applicable only when service receiver is body corporate.
Note-Supply of
man power means supply of manpower, temporarily or otherwise, to another person
to work under his superintendence or control.
1)
Service which are taxable for the first time
and taxable through the route Reverse charge mechanism with effect from 01 April,2015 is as follows.
a) Service by
Mutual Fund Agent or distributer to mutual Fund or Assets Management Company.
b) Service by
Selling or marketing agent of lottery ticket to a lottery distributor or
selling agent.
c) Service
provided by a person involving an aggregator
in any manner is taxable.
Note-Aggregator
means a person who owns and manages a web based software application and by
means of the application and communication device ,enables a potential customer
to connect with persons providing service of a particular kind under the brand name
or trade name of the aggregator.
The
details are as under.
|
Description Services
|
Liability by service provider(%)
|
Liability by service Receiver(%)
|
With effect from
|
|
Services
of mutual Fund agent or distributor to a mutual fund or asset management
Company.
|
0%
|
100%
|
01-04-2015
|
|
Services
by selling or marketing agent of lottery tickets to lottery distributor or
selling agent
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0%
|
100%
|
01-04-2015
|
|
Services
involving an aggregator in any manner
|
0%
|
100%
|
01-04-2015
|
Notification
on Goods Transport agency.
CBEC has clarified with Notification No 8/2015
dated 01-March-2015 that ancillary service like loading, unloading, packing,
unpacking , transshipment, temporary storage etc. provided by GTA along with
transport service are considered as composite service and abatement of 70% is
allowed on these services.
|
Description of Services
|
As per old Rules
|
As per New rules
|
With Effect From
|
|
Abatement Rate
|
Abatement Rate
|
||
|
Goods Transport
Agency Services
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75%
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70%
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01-Apr-2015
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Full service tax
shall be paid by service receiver after considering abatement. It means on the
value of 30%.
Reverse charge mechanism in good transport agency service
is applicable when taxable service provided or agree to be provided by GTA in
respect of transport of goods by road where the person liable to pay freight is
a)
Any factory
registered under or governed by the Factories Act, 1948 (63 of 1948).
b)
Any society
registered under the Societies Registration Act, 1860 (21 of 1860) or under any
other law for the time being in force in any part of India.
c)
Any co-operative
society established by or under any law.
d)
Any dealer
of excisable goods, who is registered under the Central Excise Act, 1944 (1 of
1944) or the rules made there under.
e)
Anybody corporate
established, by or under any law (Company).
f)
Any partnership
firm whether registered or not under any law including association of persons.
When individual or HUF is availing GTA
service and paying freight, they are not liable to pay service tax under
reverse charge mechanism and good transport agency is liable to pay service tax
on freight by charging in bill.
Contributed by : Roshan Paudel ( CA Finalist - Article Assistant at Sandeep Ahuja & Co.)
