Reverse Charge Mechanism under Service Tax

Introduction: In the Finance Act, 2012, several amendments were made to the provisions governing Service Tax. One of such amendment was introduction of Reverse Charge Mechanism in Service Tax.

Understanding the Concept of Reverse Charge Mechanism: Under normal circumstances, a service provider is liable to pay Service Tax. However, after Finance Bill 2012, in certain cases, the liability is shifted to service recipient and thus service tax is to be paid by service recipient. This is commonly known as ‘Reverse charge mechanism’ or ‘Joint charge mechanism’ as in certain cases, both service provider and service receiver are liable to pay Service Tax.

New Income Tax Return Form for financial year 2012-13

People sitting on huge assets but paying little income tax may have reason to worry. In an ambitious bid to counter tax evasion, the government has decided to introduce a new income tax return form effective financial year 2012-13, that will require individuals to disclose all their assets and liabilities, rather than just annual income from various sources. The new return, therefore, will be a comprehensive balance sheet of assets and liabilities, disclosing ownership of houses, jewellery, urban land, motor cars and other personal effects such as yachts and aircraft, along with outstanding debt.

The idea is to extend the scope of tax return to include information that is in the domain of wealth tax — a levy that has poor compliance history in the country. The department wants to zero in on individuals, mainly traders and businessmen, who disclose modest income, but own fancy SUVs, houses at posh locations and other assets that clearly do not agree with the reported income.