Please clarify me that one of my client is going to provide vehicles on hire to other company. These vehicle are provided with drivers and petrol expenses. The hire charges are fixed on monthly basis. Whether this service is covered under Rent a cab service or under Supply of Tangible goods for use Services. Company's main business is of trading goods. Please reply soon. Its urgent!!
Authority: Notification No. 3/99-ST, dt. 28/02/1999 (See at the end of this Chapter).
Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.
Definitions: "rent-a-cab scheme operator"means any person engaged in the business of renting of cabs; [Section 65(91)]
"cab"means a motorcab or maxicab; [Section 65 (20)]
"light motor vehicle"means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver; [Section 65 (62)]
"maxicab"has the meaning assigned to it in clause (22) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988); [Section 65(70)]
"motorcab"has the meaning assigned to it in clause (25) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988); [Section 65(71)]
"motor car"has the meaning assigned to it in clause (26) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988); [Section 65(72)]
"motor vehicle"has the meaning assigned to it in clause (28) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988); [Section 65 (73)]
Taxable service: Renting a cab service by a rent-a-cab scheme operator in relation to the renting a cab.
Value of taxable service: Gross amount charged by rent-a-cab scheme operator from a person for services of renting of a cab provided to him.
Exemptions
Metered Taxis/Cabs
Company/Personal Cabs
Person liable to pay: Rent-a-cab operator.
Head of Account
SI. Code
SCCD
Minor-head
004400112
Rent-a-Cab Scheme Operator Services
Sub-head
00440011201
Tax Collection
00440048
114
Sub-head
00440011202
Other Receipts
00440049
117
Sub-head
00440011203
Deduct Refunds
00440050
119
Questions & Answers
Q. 1 Who is a "Rent a cab scheme operator"?
Ans. "Rent a cab scheme operator" is a person who is engaged in the business of renting of cabs.
The new definition of rent a cab scheme operator introduced in the Finance Act, 1998 , is effective from 16tlr October, 1998. This definition is wider in scope than the earlier definition which only included a person who was the holder of a licence under the Rent-a-Cab-Scheme, 1989 framed by the Central Government under the Motor Vehicles Act, 1988 as a rent-a-cab-scheme operator. Under the Rent-a-Cab-Scheme, 1989 framed under the Motor Vehicles Act, 1988, a licence is granted only in case a person has a minimum of 50 cabs. This meant that a person who had less number, say 5 or 10 cabs and was engaged in the business of car rental, was not liable to pay service tax on the services of renting of cabs. Consequent upon the revised definition, such persons who are engaged in the business of renting of cabs, even if not covered under the Rent a Cab Scheme, 1989, framed under the Motor Vehicles Act, 1988, will also be required to pay service tax on the services of renting of cabs irrespective of number of cabs rented out by them.
Q. 2 What is the taxable service in case of Rent- a- cab- .scheme?
Ans. The taxable service rendered by a Rent a cab scheme operator means any service provided to any person, by a rent a cab scheme operator in relation to the renting of a cab.
Q. 3 What is the value of service in case of Rent a cab scheme?
Ans. The value of taxable service in relation to the service provided by a Rent a cab scheme operator to any person, is the gross amount charged by such operator from such person for services in relation to the renting of a cab and includes such rental.
Any other charges billed to the customer such as processing charges, administrative fees, charges for providing extra accessories or providing other value added services such as a provision of driver etc. shall also be includible in the gross amount chargeable to Service Tax.
However, Service Tax will not be payable in cases where a bill is raised on a Rent a Cab Scheme operator, by another rent-a-cab scheme operator who has sub-let the motor cab to the latter operator provided the principal operator pays Service Tax on the amount billed to his client for renting out the motor cab so obtained by him.
Main text of Departmental Circular/TN
[TN No. 1/2000, dated 27/4/2000 of the Pune Commission rate]
The definition of term "Rent-a-Cab Scheme Operator" as per Section 65 (38) of Finance Act, 1994 as amended means "any person engaged in the business of renting of cabs". Prior to amendment, scope of the said term was limited to a person who was holding a licence under the Rent-a-Cab Scheme, 1989, framed by the Central Government, under the Motor Vehicle Act, 1988, as a Rent-a-Cab Scheme Operator. Under the said scheme, Licence is granted only in the case where a person has a minimum of 50 cabs. However, in the revised definition, the requirement of operators being registered under the Rent a-Cab Scheme has been dispensed with. Consequently, any person who is engaged in the business of renting of cabs would be required to pay Service Tax irrespective of number of vehicles engaged by him in providing this service. The definition of 'Cab' includes 'Motor Cab' or 'MAXI CABS' Section 2 (25) of the Motor Vehicles Act, 1988, a Motor Cab is defined as any motor vehicle constructed or adapted to carry not more than 6 passengers excluding the driver for hire or reward, and MAXI CABS means' any motor vehicle constructed or adapted to carry more than 6 passengers, but not more than twelve passengers excluding the driver, for hire or reward. In either case, these are vehicles available for time, and are more popularly known as Vans.
5.1 Any person who gives his vehicle viz. Car/TaxiNan to a third person for the purpose of local transport will also be covered under the Rent-a-Cab Scheme Operator. The taxable service rendered by a Rent-a-Cab scheme operator means any service provided to any person by a Rent-a-Cab scheme operator in relation to the renting of a cab. The rate of service tax is 5% and the value of taxable service in relation to the service provided by a Rent-a-Cab Scheme operator to any person, shall be the gross amount charged by such operator from such person for services in relation to the renting of a cab and include such rental.
5.2 The value of taxable service in relation to the service provided by a Rent-a-Cab Scheme Operator to any Customer, shall be the gross amount charged by such operator from such customer for services in relation to the renting of a cab and include the rental so charged. Any other charges billed to the customer such as processing charges, administrative fees, charges for providing extra accessories or providing other value added services such as a provision of driver etc. shall also be includible in the gross amount chargeable to service tax.
5.3 However service tax will not be payable in cases where a bill has been raised on a Rent-a-Cab Scheme Operator, by another Rent-a-Cab Scheme Operator who has sub-let the motor cab to the latter operator provided he pays service tax on the amount billed to his client for renting out the motor cab so obtained by him.
* Originally levy was effective from 16/07/1997 to 22/02/1999 vide Notification No. 26/97-ST, dt. 11/07/1997. Later Noti. No. 3/99, dated 28/02/1999 exempted this service from 23/02/1999 to 31/03/2000.
13 September 2011
Thanks Ram Avatar Ji, Actually my client taken the service tax registration under Supply of Tangible Goods for use Service. Is is wrong to deposit tax under Supply of Tangible goods for services..??
CAclubindia
