Service Tax under reverse charge - A layman's confusion
TOP service tax bosses are attending various seminars on service tax across the length and breadth of the country explaining the negative regime. However, it appears the message is not reaching the bottom and there is still a large number of doubts in the minds of not only the trade and industry, but ordinary citizens who are scared whether they are liable under reverse charge. The interactive session in one of the seminars organised by the Team TRU lasted only for a few minutes and the audience being informed by the organisers even before the start of the session, that they have time only to take a couple of questions.
DDT has received mail from a concerned Netizen who asked us innocently, "Am I required to take registration and pay service tax if I engage a builder for constructing more than one unit of residence? Am I required to pay service tax under reverse charge if I buy a life insurance?"
Sir, under partial reverse charge, not all the service receivers are liable for service tax. The reverse charge in respect of works contract, rent a cab and manpower supply is applicable only if the
Service Provider is:
any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons and
Service receiver is:
a business entity registered as body corporate
So, in case of individuals, there is no liability to pay service tax under partial reverse charge mechanism. In respect of insurance also, there is no liability under reverse charge on the individual who buys the insurance.