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What is reverse charge mechanism in service tax?
What is reverse charge mechanism in service tax?
Generally, the person providing services has to add the service tax to his invoice and receive it from his client/customer. However, in some cases (like transporters) the service tax is deducted by the service receivers and has to be deposited with the government. These cases (where service receiver collects the service tax) fall under the Reverse Charge Mechanism. The law has specified the list of services where reverse charge mechanism applies.
