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Reverse charge

nidhi (student) (346 Points)

15 March 2015

In case of reverse charge , what is the rate of abatement for renting of a motor cab ?

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4 Replies

Rubul (Student) (151 Points)
Replied 15 March 2015

60%.

Adish Jain (Chartered Accountant) (36 Points)
Replied 15 March 2015

Notification No. 26/2012 dated 20.06.2012 provides 60% abatement in respect of service "Renting of any Motor Vehicle designed to carry passengers" subject to the condition that CENVAT Credit on inputs, capital goods and input services, used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

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Vishal Goel (Chartered Accountant) (1688 Points)
Replied 16 March 2015

Hello,

When the service receiver is paying 100% of service tax on the service of renting of motor vehicle to carry passengers, he can claim abatement. Abatement available for the service is 60%. Therefore the service provider is liable to pay service tax only 40% of the value of service.

However, in order to claim abatement, there are some conditions to be satisfied. CENVAT Credit on inputs, capital goods and input services used for providing taxable services, should not be taken.

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