Sunday, 26 May 2013

Reverse charges of Service Tax on car Hiring



QUERY:

A company hires passenger car through out the year. 
  
Pays Rs. 100000.00 
Now ser taxable after abetment is 40% 
  
Hence, ST to be paid on  40000.00 
  
Now under reverse charge machanism  Company to Pay only 20000.00 
and Service provider to pay 20000.00 
  
Kindly confirm if my contention is correct 
  
CA Anil Agrawal 
9431881950 
agrawalaka@sify.com 


REPLY:1
Dear Anilji, 
  
As per Notification No. 30/2012 service tax on rent-a cab scheme, if the abatement of 40% is there then 100% service tax will be paid by the service receiver and nothing to be paid by service provider. Therefore, your company needs to pay 100% service tax amount if there is a abatement of 40%. 
  
Therefore, the intention is not correct as per the Service tax law. 

Thanks & Regards 
CA Sumit Kr Agarwal 
9903979735 

REPLY:2
Service recipient will pay service tax on Rs. 40,000/- (40% of the value). 
Service provider will pay service tax on balance 60% if he intends to avail 
service tax credit, other wise he does not have to pay any service tax, if 
the RCM is applicable. 

-- 
Thanks & Regards; 

CA. Narayan Agarwal | FCA| 
Partner | D A V A & Associates | Chartered Accountants | 
Mercantile Building, | A Block, Room # 18 | 1st Floor | 
9, Lal Bazar Street | Kolkata 700 001 | 
Phone +91 33 22313940 | Cell +91 9874355518 | 
mail: kolkata@dava.co.in| web: www.dava.co.in
Offices: Chandrapur, Delhi, Kolkata 


REPLY:3
Dear Anil, 

The extent of service tax liability to be discharged by the service 
receiver would depend upon whether cab vendor(service provider) has claimed 
abatement on the value of services provided by them. If the Cab Vendor had 
availed abatement, then ST of 12.36% on 100% of the value of service is to 
be paid by the service provider. However, if the vendor has not availed 
abatement, then the service receiver will be liable to pay ST on on 40% of 
the value of taxable service. 
Thus, in your case, you will be liable to pay ST of 12.36%*40000 = Rs.4944 

shashi chirania

Dear Mr. Anil 
Sorry for the mistake in above reply. 

Here is the correct reply 

The extent of service tax liability to be discharged by the service 
receiver would depend upon whether cab vendor(service provider) has claimed 
abatement on the value of services provided by them. If the Cab Vendor had 
availed abatement, then ST of 12.36% on 100% of the value of service is to 
be paid by the service* receiver*. However, if the vendor has not availed 
abatement, then the service receiver will be liable to pay ST on on 40% of 
the value of taxable service. 
Thus, in your case, you will be liable to pay ST of 12.36%*40000 = Rs.4944 

shashi chirania

REPLY:4
As per Notification no 30/2012 ST dt 20.06.2012, it is mentioned that in 
respect of service provided or agreed to be provided by way of renting 
motor vehicle designed to carry passengers *on abated value *to any person 
who is not engaged in the similar line of business, 100% service tax 
shall be paid by SR. Ie. on Rs. 40000/- in the instant case. any person 

Satish Bansal

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