Reverse Charge Mechanism of Service Tax

Reverse charge mechanism is not a new concept in service tax. Under the reverse charge mechanism, instead of service provider, the service receiver is liable to pay service tax. In that case, the service receiver will register himself with service tax authorities and file the required returns. The general exemption of Rs. 10 lacs is not available for that. The government has imposed the liability on service receivers before that also such person receiving services by goods transport agencies but these requirements are mandatory for companies and government authorities receiving the services in old days.

The Government has issued Notification no 30-2012 dated 20/06/2012 where it has given complete list of services that are covered under reverse charge mechanism. In some cases both service receiver and service provider has to pay service tax in prescribed ratio.