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What is Service Tax Reverse charge mechanism?

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What is Service Tax Reverse charge mechanism?
posted Jun 20, 2017 by Reshmi S

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As per section 68(1) of the Finance Act, 1994, every person providing taxable services to any other person shall pay service tax at rate specified in section 66. Earlier, we showed in detail about service tax meaning & its rates. Thus, normally, the liability to pay service tax lies with the service provider. He shall collect the service tax from the service recipients and thus pay it to the account of government.

But along with this, section 68(2) states that, central government may specify any other person who shall be liable to pay service tax and thus all provisions of service tax shall apply normally. This means any person other than service provider, i.e., the service recipient shall be made liable to pay the service tax. This mechanism of shifting the service tax liability from service provider to the service recipient is known as service tax reverse charge mechanism.
The concept of reverse charge mechanism under service tax was introduced with 1997 by inserting a new subsection 68(1A) with notification no. 30/2012-ST.

answer Jun 21, 2017 by Niharika Singh
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