Thursday, August 9, 2012

SECURITY SERVICES ,DIRECTOR COVERED IN REVERSE CHARGE MECHANISM


on Thursday, August 9, 2012

Two New services has been added in reverse charge mechanism in service tax act through notification 45/2012 and 46/2012 dated 07.08.2012. These new services are


  1. Services by director  of a company to the said company  (100% reverse charge on company)
  2. Security Services provided  by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory (25 % by service provider and 75 % service Receiver same conditions as given in manpower)
Meaning of security services 

“security services” means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity;”
Complete List of services covered under reverse charge Mechanism under service tax act  is available here.
Read FAQ about Director and Security Services Under reverse charge Mechanism 

Now, w. e. f. 07.08.2012, following additional services shall be covered by reverse charge mechanism:

Sl. No.
Nature or Description of
service
% of Service Tax payable by service provider
% of Service Tax payable by service Recipient
1.
Security Services provided by Individual, HUF, partnership firm or AOP to body corporate business entity
[Security services" means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity- Rule 2(fa) of Service Tax Rules, 1994]


25%
75%
2.
Services  by a director of a company to the said company
Nil
100%

Read FAQ about Director and Security Services Under reverse charge Mechanism

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUBSECTION (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 45/2012 - Service Tax
New Delhi, the 7th August, 2012

G.S.R. (E).- In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.30/2012-Service Tax, dated the 20th June,2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 472 (E), dated the 20th June, 2012, namely:- 

In the said notification,-

(a) in para I, in clause (A),-

(i) after the sub-clause (iv), the following sub-clause shall be inserted, namely :-

“(iva) provided or agreed to be provided by a director of a company to the said company;”;

(ii) in sub-clause (v), after the words “manpower for any purpose”, the words “ or security services” 
shall be inserted.

(b) in para II, in the Table,-

(i) after Sl.No. 5, the following S.No. and entries shall be inserted, namely:-

“5A in respect of services provided or agreed to be provided by a director of a company to the said company

Nil 100%”

(ii) in Sl.No. 8, in the entries under the heading „Description of a service‟, after the words “manpower for any purpose”, the words “or security services” shall be inserted.

[F.No. 334 /1/ 2012-TRU]
(Rajkumar Digvijay)
Under Secretary to the Government of India

Note.- The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 30/2012 - Service Tax, dated 20th June, 2012, vide number G.S.R. 472 (E), dated the 20th June,2012 and the same has not been amended so far.



[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
Government of India Ministry of Finance (Department of Revenue)
Notification No. 46/2012 - Service Tax
New Delhi, the 7th August, 2012
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:—

1. (1) These rules may be called the Service Tax (Third Amendment) Rules, 2012.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Service Tax Rules, 1994, in rule 2, in sub-rule (1),-

(A) in clause (d), in sub-clause (i),-

(i) after the item (E), the following item shall be inserted, namely;-

“(EE) in relation to service provided or agreed to be provided by a director of a company to the said company, the recipient of such service;”;

(ii) in the item (F), in the sub-item (b), after the words “manpower for any purpose”, the words “ or security services” shall be inserted.

(B) after clause (f), the following clause shall be inserted, namely:—

“(fa) “security services” means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity;”

[F.No. 334 /01/2012- TRU]
(Raj Kumar Digvijay)
Under Secretary to the Government of India
Note.- The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 2/94-ST, dated the 28th June, 1994 vide number G.S.R. 546(E), dated the 28th June, 1994 and was last amended by notification No. 36/2012-Service Tax, dated the 20th June, 2012 vide number G.S.R. 478 (E), dated the 20th June, 2012.

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  1. COULD YOU ELUCIDATE FURTHER ON THIS ISSUE.
    IF SOME SECURITY COLLECTS THE SERVICE TAX AND DEPOSITS IT WAS OKAY BUT UNDER THE NEW CONDITIONS IF DEALING WITH REGISTERED ENTITIES WE ARE REQUIRED TO DEPOSIT THE 3 PERCENT SERVICE TAX. WILL THE COMPANY OR THE CLIENT BEAR THIS 3 PERCENT OR THE SECURITY COMPANY MAKES 3 PERCENT PAYMENT ON ITS OWN.. CANT WE COLLECT THIS 3 PERCENT AND PAY.. ?
    PERTINENT QUESTION IN THIS CONTEXT AS CLIENTS ARE ARGUING THEY ARE NOW ORDERED TO PAY OR DEPOSIT ONLY 9 PERCENT?
    HELP...

    ReplyDelete
    Replies
    1. Security Services is liable under reverse charge ,if following condition are fulfilled
      1. Security services are provided by Individual/HUF/Firm/AOP and
      2. Service receiver is Body Corporate.

      If any of the condition is not fulfilled then service provider is remain liable to deposit the service tax.

      Further Service tax department has issued direction only regarding who will deposit the how much amount as service tax . There is no bar placed by service tax department to recover the 25 % service tax from service receiver.

      Recovery of service tax from service receiver is guided by contract between service provider /service receiver.

      If contract rates are exclusive of service tax or service tax extra then you can recover tax from service receiver .

      Delete
  2. Sandeep Kumar batraAugust 27, 2012 at 10:27 AM

    If director is traeted as employee of the company and if he receive any thing extra say fees for attending board meeting in such a case whether service tax is payable on such receipts.Here service provider and receipient relation is missing

    ReplyDelete
  3. Our Man Power suppliers charged full Service tax in July, August & September Invoices. Can we liable to pay the Service Tax as service provider deposited full tax to Govt. Please clear such cases.

    ReplyDelete
  4. Will Chartered Accountancy service be charged under reverse charged basis as it includes "the services of investigation, detection or verification, of any fact or activity"

    ReplyDelete
  5. we are register trust receiving services from manpower & security service provide. so we are eligible to pay service tax under reverse charges????

    ReplyDelete