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Service tax payable on rent-a-cab service

Paresh (Final C.A. Student) (92 Points)

05 September 2013

Dear all,

My query is with reference to Notification No. 30/2012-Service Tax.

In the said notification Point No.7(b) states that ''in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business '', the service receipient being a company registered under Companies Act,1956 needs to pay service tax under reverse charge mechanism.

Now my query is - If we hire a car to travel from our office to Airport, do we need to pay service tax on such transactions under reverse charge mechanism?

regards,

Paresh.

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30 Replies

Aman (Finance Professional) (604 Points)
Replied 05 September 2013

Yes U have to pay............

1 Like

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A.JAGADEEP (ARTICLE STUDENT) (151 Points)
Replied 05 September 2013

To application of RCM, there are some conditions.

1. The service receiver should be a company and

2. The service provider should be a Individual

If the above two conditions are satisfied, then RCM will apply.

And notification clearly says "to carry passengers".

So, if above 2 conditions are satisfied and for the above mentioned purpose then RCM will apply. For other details, please find the below mentioned link.

/articles/accounting-treatment-of-service-tax-under-reverse-charge-mechanism-15711.asp#.UgX2lvkvy4Y.gmail

1 Like

Sidharth (Article Assistant) (80 Points)
Replied 05 September 2013

Agree with above replies !

1 Like

kalyan (student) (26 Points)
Replied 05 September 2013

the reverese charge mechanism will be applicable only when

1. the service provider is a individual/huf/partnershipfirm/propritorship firm

2. the service recepient is a company

in your case if u are working for a company and you are receiving services from a individual/huf/partnershipfirm/propritorship firm then your company need to pay service tax under reverse charge mechanism even if the service provider does not cross 10 lacs limit. (i.e. service provider turnover is immetrial)

1 Like

satya (Executive Excise) (1839 Points)
Replied 06 September 2013

Dear All,

Please note that as of now Service Tax paid on "Rent a Cab Service" is not eligible to take Cenvat Credit benefit to service receiver.

2 Like

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Kriti (Article Assitant) (106 Points)
Replied 16 January 2014

As per notifi 30/2012 the person receiving the service will have to deposit 100% ST under RCM if it is abated value and 40% in case of non-abated.

In my case tour operator has not charged ST in the invoice, now how should I decide whether to pay 100% ST or 40% ST under RCM.

Aman (Finance Professional) (604 Points)
Replied 16 January 2014

IF SERVICE PROVIDER IS NOT CHARGING SERVICE TAX THEN IT MEANS ITS A CASE OF ABATED VALUE i.e, SERVICE PROVIDER IS NOT REQUIRED TO PAY SERVICE TAX & TOTAL SERVICE TAX LIABILITY OF RECEIVER WILL BE 100%*(BILL AMT*40%*12.36%).....

1 Like

Smruti (CA) (183 Points)
Replied 05 March 2014

Originally posted by : Aman
	IF SERVICE PROVIDER IS NOT CHARGING SERVICE TAX THEN IT MEANS ITS A CASE OF ABATED VALUE i.e, SERVICE PROVIDER IS NOT REQUIRED TO PAY SERVICE TAX & TOTAL SERVICE TAX LIABILITY OF RECEIVER WILL BE 100%(BILL AMT40%*12.36%).....