What is Partial Reverse charge under Indian Tax

Posted on 10 June 2022 Category : Indian Tax Terms

Meaning of Partial Reverse charge under Indian Tax

This post explains about Partial Reverse charge under Indian Tax.

Partial Reverse charge.

The concept of reverse charge was introduced in the service tax regime vide Notification No. 30/2012, dated 20.06.2012 and came into effect from 20.06.2012.

Under reverse charge, the recipient of service is to pay the tax to the credit of the Central Government. The reverse charge is of two types – Full reverse charge and partial reverse charge. Under the full reverse charge, the service recipient is to pay 100% of the tax on the value of services received by him. Under partial reverse charge, the service recipient is to pay certain percentage of tax on the value of taxable service and the balance amount is to be payable by the service provider.

The Notification No. 30/2012 has met many amendments and as on date the following services come under the net of reverse charge mechanism-

ü in respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business – 100%;

ü in respect of services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company – 100%;

ü in respect of services provided or agreed to be provided by a selling or marketing agent of lottery tickets in relation to lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (17 of 1998)- 100%;

ü in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road – 100%;

ü in respect of services provided or agreed to be provided by way of sponsorship – 100%;

ü in respect of services provided or agreed to be provided by an arbitral tribunal – 100%;

ü in respect of services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly

ü in respect of services provided or agreed to be provided by Government or local authority excluding,-

(1) Renting of immovable property, and

(2) Services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994 – 100%;

ü in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business – 100%;

ü in respect of services provided or agreed to be provided by way of supply of manpower for any purpose or security services – 100%;

ü in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory other than non-assesse online recipient– 100%;

ü in respect of any service provided or agreed to be provided by a person involving an aggregator in any manner – 100%;

ü in respect of services provided or agreed to be provided by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India – 100%;

Under partial reverse charge

ü in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non-abated value to any person who is not engaged in the similar line of business – service provider – 50% and service receiver – 50%;

ü in respect of services provided or agreed to be provided in service portion in execution of works contract – service provider – 50% and the service receiver – 50%

The information on Partial Reverse charge under Indian Tax is detailed above. Comment below your thoughts on Partial Reverse charge under Indian Tax.

Learn Exports Imports Free, Click here

Click here to know GST rate of your goods or service

Cancellation of GST Registration in India, FAQ

Can a person without GST registration claim ITC?

Why separate Registration of GST in each state in India, for each business.

Latest date to file GST registration in India

Procedures to obtain GST registration for non-resident taxable person

Is digital signature option available under registration of GST in India?

Advantages of GST registration in India

Who has to obtain GST registration in India?

Does GST registration number of my firm change time to time in India?