Service Tax

A departure from this system of taxation, which is not in consonance with the fundamental principles of indirect taxation, can be found in the service tax provisions where the law requires the service receiver to pay the tax as a person liable to pay tax. This concept is known in common parlance as “reverse charge mechanism”. 

With effect from 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of service tax shall be both on the service provider and the service recipient. Usually such liability is affixed either on the service provider or the service recipient, but in specified services and in specified conditions, such liability shall be on both the service provider and the service recipient.