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Abatement for Rent a cab scheme operator

Nitesh (Chartered Accountant) (340 Points)

22 August 2007

Can any body can tell me whether there is any abatement for on Rent a cab scheme perator for charging service tax. please convey me as soon as possible

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Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 23 August 2007

EXEMPTION UPTO 60% OF GROSS AMOUNT CHARGED BY RENT-A-CAB SCHEME OPERATOR [Noti. No. 9/2004-ST, dt. 9-7-2004] In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service provided by a rent-a-cab scheme operator in relation to renting of a cab, from so much of the service tax leviable thereon under section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to 40% of the gross amount charged from any person by such operator for providing the said taxable service: PROVIDED that the said exemption shall not apply in such cases where-- (i) credit of duty paid on inpus or capital goods has been taken under the provisions of the Cenvat Credit Rules, 2004; or (ii) such rent-a-cab scheme operator has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2003-S.T., dt. 20-6-2003 (GSR 503(E), dt. 20-6-2003)].

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Nitesh (Chartered Accountant) (340 Points)
Replied 23 August 2007

Mr. Sampat Jain, sorry to tell you but your are fully updated. The notification mentioned by you is withdrawan from 01st March 2006 vide notification no. 2/2006. Give your suggestions carefullly as other beleive on the Chartered like us.

CA Nikita (Chartered Accountant) (4158 Points)
Replied 23 August 2007

hi!!

Non – availability of credit of input services in case of services where abatement is availed.

In case of certain services like Mandap Keeper, Construction services, Erection Commissioning or installation services, outdoor caterer, rent a cab services, etc an abatement of certain percentage from gross amount was provided subject to the condition that credit of excise duty paid on inputs or capital goods used in providing the said services was not availed and the benefit of notification no. 12/03 was not availed by the service provider. However, service provider was eligible to avail the credit of service tax paid on input services.

These various notifications are sought to be amended by notification no. 1/2006 under which a new condition that the service provider should not avail the credit of service tax paid on input services has been imposed. Therefore, effective from 1st March 2006, the payment of service tax on abated value can be made only when the service provider has not availed the credit of service tax paid on input services.

If i'm not wrong the scope has increased by the finance bill,07

The definition of cab under the Rent-a-Cab-Scheme Operator's service has been extended to include any motor vehicle constructed or adapted to carry more than 12 passengers. However, the renting of the cab for use by an educational body, other than commercial training or coaching centre,is not subject to the levy of service tax.