Car lease

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Faheem Ansari (Querist)
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13 August 2013 Dear,

Our company has taken a car on lease, which is given to a director for the official use.
The Service provider is charging service tax @ 12.36%, can the company is eligible for service tax setoff.
Further, what rate of TDS is applicable, is section 94C or 94J.
Whether provision of service tax under reverse charge is applicable or not.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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14 August 2013 for tds - sec 194 I will be applicable.
co is eligible for service tax set off if other condition are satisfied.

Ganeshbabu K

Ganeshbabu K (Expert)
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14 August 2013 1)Neither 194C nor 194J.

2)TDS is Applicable under Secion 194I.

3)It was taken on lease,,so it is clearly says that running and maintenance expenses like petrol,repairs etc. has been incurred by person who has hired the vehicle Then we can say that it should be covered under section 194I.

Ganeshbabu K

Ganeshbabu K (Expert)
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14 August 2013 1)Yes,If you hired a car then you have to deposit servicetax yourself as reversecharge on renting of motor vehicle for carrying passengers,has been made applicable from 01.07.2012

2)Applicable only if Service Provider is HUF, Individual, firm and Service receiver – Business entity registered as body corporate.

3)Tax on 40%, if Cenvat credit is not availed by the service provider

4)No Cenvat credit in most of the cases,,as it is specifically excluded from the definition of input service..[refer to exclusions services for input services definition it is in clause b] – hence cost to company.

5)But If motor vehicle is taken on hire (operating lease) without driver, it is ‘transfer of right to goods’. Then it is deemed sale of goods and Vat will apply – not service tax.

Thanks & regards
Ganesh babu k

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