Under the erstwhile regime of taxation of services prior to introduction of negative list based on a positive list of services (as applicable prior to July 1, 2012), service tax on rent-a-cab service was payable by the service provider only.
However, with effect from July 1, Service tax liability arising on account of rent-a-cab services is required to be borne partially by the service recipient under the reverse charge mechanism, in cases where the services are rendered by an individual, HUF, partnership firm or an association of persons. Hence, service recipient would be required to discharge service tax under reverse charge mechanism on rent-a-cab services received by you from cab vendors.
The extent of service tax liability to be discharged by service recipient would depend upon whether cab vendor has claimed abatement on the value of services provided by them. In both situations, i.e., whether the cab vendor has claimed abatement or not, your liability would be 12.36% of 40% of total service value. Section 69 of the Finance Act, 1994 has made it mandatory for every person liable to pay service tax to register under the service tax. So, you would be required to obtain registration as a service recipient.
However, with effect from July 1, Service tax liability arising on account of rent-a-cab services is required to be borne partially by the service recipient under the reverse charge mechanism, in cases where the services are rendered by an individual, HUF, partnership firm or an association of persons. Hence, service recipient would be required to discharge service tax under reverse charge mechanism on rent-a-cab services received by you from cab vendors.
The extent of service tax liability to be discharged by service recipient would depend upon whether cab vendor has claimed abatement on the value of services provided by them. In both situations, i.e., whether the cab vendor has claimed abatement or not, your liability would be 12.36% of 40% of total service value. Section 69 of the Finance Act, 1994 has made it mandatory for every person liable to pay service tax to register under the service tax. So, you would be required to obtain registration as a service recipient.
2 comments:
Sir , plz confirm the provision in the below mentioned case
if the company hires a cab Say bolero car for carrying passengers from factory site to guest house or other places approved by the approving authority and the owner of cab charges bill in the following ways. what will be the servicetax liability as per rcm
I)Raises bill for the whole month by calculating the opening & closing reading of the meter
II) bill is charged as per contract value for the whole month
III) bill is charged on Daily Basis
Sir Reverse charge mechanism (notification no. 30/2012-ST dated 20/06/2012) is applicable on rent a Cab service when the provider of service is Individual, HUF, Partnership firm, AOP and recipient of service is Body corporate. In rest of the cases reverse charge is not applicable.
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