Renting of cab

This query is : Resolved

Somanath Hiremath (Querist)
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02 August 2014 Dear Sir,

Whether service provider is liable to pay service tax on 60%of taxable value in case of renting of vehicle.( Provider is not claiming Cenvat credit.

Example

Mr X is a Service provider whose give vehicle to a Company on rent basis for rs 10,000. The company is paying Service tax on 40% of bill amount( i.e on Rs 4,000) to govt under reverse Charge Mechanism. Whether Mr x is Liable to Pay St on Remaining 60% (i.e on 6,000) of bill amount.

Ganeshbabu K

Ganeshbabu K (Expert)
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03 August 2014 If Provider is not claiming inputs
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Abatement can be taken @60%
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So only 40% is taxable
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So if RCM Applicable-Service receiver responsible to discharge this liability directly to govt.
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If RCM Not applicable-Service provider have to charge 40% of service tax in his invoice and collect from customer and pay to govt.

Somanath Hiremath

Somanath Hiremath (Querist)
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07 August 2014 department persons are asking us to pay service tax on remaining 60% bill amt.We are not claiming cenvat credit

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Ganeshbabu K

Ganeshbabu K (Expert)
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07 August 2014 If you are service receiver then maximum liability on rent a cab service will not exceed 40% of service tax
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If service provider intends to take cenvat credit on his inputs he has to pay balance 60% tax
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Refer reversecharge notification

Ask them reason for it,,