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Service tax on bus hiring charges

manoj (Service) (313 Points)

14 July 2016

Please explain.

Service tax on Bus hiring charges by a company for employee to drop and pickup.

Abatment

Rate

Reversecharge

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4 Replies

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 14 July 2016

Abatement : As per Sr. No. 9 of Notification No. 26/2012-ST dated 20-06-2012, abatement of 60% is available on Rent-A-Cab Service i.e. service of renting of any motor vehicle designed to carry passengers. It means service tax is payable on only 40% of the value of Rent-A-Cab service. The abatement is subject to the condition that the Cenvat Credit of inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of Cenvat Credit Rules, 2004. If the service provider avail cenvat credit on any input, capital good or input service, used for providing rent a cab service, then abatement is not available.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 14 July 2016

Reverse Charge Mechanism is applicable on Rent-A-Cab service if all the following conditions are fulfilled:

Service Receiver is Business entityregistered as body corporate located in taxable territory

Service Provider is Individual, HUF, proprietor /partnership firm, AOP located in taxable territory

Mukesh Kumar (Accounts Manager) (1466 Points)
Replied 14 July 2016

DEAR VISHAL SIR

YOU HAVE EXPLAIN TO SERVICE TAX LIABILITY IS VERY WELL ,

BUT MANOJ SIR DO NOT DISCLOSE THAT WHAT HE WANT TO KNOW THAT FOR WHOM SERVICE TAX IS LIABLE SERIVCE RECIVER OR SERIVCE PROVIDER .

MANOJ SIR IF WANT TO KNOW THAT 1. IS SERVICE RECEIVER IS S.T. LIABLITY 2. IS SERIVCE PROVIDER IS S.T. LIABILITY .

THAN FIRST OF ALL YOU SHOULD READ TERMS AND CONDITION OF TAXES POINTS IN THE AGGREMENT OR WORK ORDER.

IF THARE IS NO CLAER IF AGGREMENT THAN YOU SHOULD CHECK THE INVOICE ( HIRE CHARGE BILL ) OF SERVICE PROVIDER .

BUT EVEN AFTER THAT YOU NOT CLAER , THAN YOU CAN READ MR VISHAL EXPLATION AS ABOVE

GOOD LUCK

JYOTI MITTAL (Student CA Final ) (27 Points)
Replied 23 February 2017

@ Vishal Goyal

I would seek to ask that the abatement has been a bit modified through notification 08/2014 bringing thereby the word 'motor cab' in place of 'motor vehicle' earlier. Won't this restrict the scope of abatement. Further, in reverse charge the expression is 'motor vehicle' only (Though notification 10/2014 is in relation to this only but it amends the rate of tax payable by provider & receiver, keeping the descripttion intact). If you may please elaborate upon this inconsistency between the provisions of abatement & RCM, the scope of both when we are to assess about hiring of bus.