Service tax on car lease

3941 views 7 replies

Meyyappan

Manager Accounts

93 Points Joined December 2010

Hi all,

We are a ltd company, for employees as a package benefit we are offering car lease as a part of the package to them. generally we used to pay them to their spouse/mother name (on whose name the contract has been prepared). now as per the new service tax amendments we have to pay service tax for these!!?? my questions are:

1.whether we have to pay service tax?? if yes is it either 100% or 40% (aftering considering 60% abatement)

2.if it is so whether we have to get the service tax nos of those persons?? (if yes we have to ask them to register for service tax!! don't think for employees its possible for them to get service tax regn on their spouse names!!)

3. whether we can take cenvat credit of the same??

I searched the entire forum but not able to get answers for all the above so iam posting this question,

thanks in advance

Meyyappan.S

Replies (7)

Guest

The persons who are receiving such service has to pay service tax, irrespective of amount. So they have to get them registered.

The payment should be 60% incase of abatement or 100% in case of normal provision. Under abatement you cannot claim credit of input services.

Out of the total payment, the service receipient has to collect and pay

Total amount of abated value in case of abatement i.e. 60% or
40% of service tax in case of non abatement.

The company has to pay

Nil - In case of abatement and
60% - In case of non-abatement. But incase of non-abatement, you can avail input credit while paying the same.

The service recipient is paying the tax on behalf of you. It is the service recipient who can claim input credit and not the company on the ST paid by the company.

Guest

Mr. Meyappan,

The option is you can show that as perquisite provided to employee. The benefit is

The service recepients need not register.
You need not pay service tax
The final tax liability will be on employee which if he planned well can be minimised to 10%

Meyyappan

Manager Accounts

93 Points Joined December 2010

Thanks Sai tharun boppana :)

so as you say i can mention it as perquisite provided to employee and i (company) need nots to be any tax and they(employee) need nots require to register also, but you mentioned

"final tax liability will be on employee which if he planned well can be minimised to 10%"!!! i'm not clear on these can you just brief on that.

Guest

Mr. Meyappan,

It depends upon individual to individual. If the taxable donot exceed 5 lakh. Then the tax on such perquisite will also be 10%. That is what I mean.

Meyyappan

Manager Accounts

93 Points Joined December 2010

Thanks Sai tharun boppana :)

so you mean to say only individual IT will cover for this topic and not any service tax will be applicable on this context if it is for company or individual;