(IND) Reverse charges for a service receiver and a service provider
Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012
A legal entity or a service receiver that receives a service from a vendor or a service provider is liable to pay complete or partial service tax for the service that is received.
This topic does not apply to versions of Microsoft Dynamics AX 2012 prior to cumulative update 1 for AX 2012 R2.
Depending on the type of vendor and the service that is provided, the tax liability is calculated by using one of the following methods:
100 percent service tax – The service receiver is liable to pay 100 percent of the service tax for services that are provided by vendors, such as insurance agencies, the goods transport agency (GTA), and sponsors.
Reverse charges on service tax – The service receiver and the service provider are both partially liable to pay the service tax on services such as cab rentals, the supply of manpower, and work contract services. The reverse charge on service tax is calculated based on the reverse charge percentage that is specified for both the service receiver and the service provider for a service.
In AX 2012 R3 and cumulative update 6 or later for AX 2012 R2: When you apply a reverse charge to a purchase transaction that is created for Others service category items, then the input tax is posted to the expense account instead of the recoverable account or interim recoverable account.