Service Tax on Car Hire Charges

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(Querist)


26 May 2008

Hi all,

A party has raised a bill towards car hire charges. He has charged Service Tax at the prescribed rate on 40% of the gross value of service provided. While other parties, providing same service are charging service tax on 100% of the gross value of service provided. I wanted to know what is the rule? Is the party charging service tax on 40% of the gross value of service provided is enjoying any abatement or he is not charging service tax on cost of fuel consumed? Please clarify.

Jitender (Expert)


26 May 2008

if a person is charging on 40% value then service provider is not entitled to cenvat credit.

CA. Vineet Grover (Expert)


27 May 2008

Hi Partha,

Abatement to the extent of 60% is admissible for the rent-a-cab operator providing such services, if the service provider does not avail the benefits under Cenvat Credit Scheme or the benefits under Notification No. 12/2003-S.T., dated 20-6-2003. (Notfn. No. 1/2006-S.T., dated 1-3-2006).

Rgds/
Vineet

CA. Vineet Grover (Expert)


27 May 2008

Hi Partha,

Abatement to the extent of 60% is admissible for the rent-a-cab operator providing such services, if the service provider does not avail the benefits under Cenvat Credit Scheme or the benefits under Notification No. 12/2003-S.T., dated 20-6-2003. (Notfn. No. 1/2006-S.T., dated 1-3-2006).

Rgds/
Vineet

CA. Vineet Grover (Expert)


27 May 2008

Hi Partha,

The effective Service tax rate shall be 4.944% (40% of 12.36%) on the gross bill.

Rgds/
Vineet



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