The base rate is the minimum amount of earnings that the employee is to receive. The employee may earn additional money by working overtime or by earning incentive bonuses. The amount of money that the employee earns when she works overtime does not increase her base pay amount.
In case of Reverse Charge mechanism the service receiver is either required to pay the whole amount of service tax or part of the amount of service tax.Say for example in case of works contract the service recipient is required to pay 50% of the amount of service tax.n case abatement is applicable then the service tax is not payable on the whole amount of bill. Say for example in case of GTA (goods Transport Agency) the taxable rate is 25% (i.e 75% abatement is allowed).
See Appendix 2 for tax of the Notification. 2 Issues relating to reverse charge Â¨ The small service provider exemption of ` 10 lakhs not available when tax is payable under reverse charge. Â¨ Cenvat credit cannot be used to pay tax by service receiver.Service tax as to be paid by cash only i.e. GAR-7 challan.Â¨ Once paid, Cenvat credit can be taken if otherwise it is his eligible âinput serviceâ. Â¨ Tax should be paid under service tax registration number of service receiver and included in his return as he is liable to pay service tax. Cenvat credit cannot be used to pay tax by service receiver. Service tax as to be paid by cash only i.e. GAR-7 challan. Â¨ Once paid, Cenvat credit can be taken if otherwise it is his eligible âinput serviceâ.