The aspect of service tax which was earlier beneficial only for the service provider has been more broadened and made beneficial for both the service receiver and provider by apportioning the liability between the two.
The new updated policy effective from April 1, 2016 states that any service other than those exempted by the government or the local authority to a ‘Business Entity’ is liable for service tax.
A business entity can be defined as any ordinary person carrying out activities related to industry, commerce or any other business or profession.
The above listed services will be chargeable only when the turnover of the business entity will be more than 10 lakhs and the gross amount charged for the service exceeds Rs 5000
After a careful observation it can be easily said that majority of the services obtained by the business entities would be liable under the reverse change mechanism.
It seems that the government aspires to earn huge revenue by stint of right to use the radio frequency spectrum, by apportionment of natural resources by the government. But this process will lead to large consent annoyance for business entities and working capital impact for the entities involved in it.