Clarification regarding service tax on rent a cab service

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This query is : Resolved

ARBIND KUMAR CHOUBEY (Querist)

18 June 2012 1)We are receiving a services for Hiring of Vehicle but Total turnover of Service provider is less than 10 lacs whether service tax is applicable on service provider. whether service receiver is liable to pay 40% of service tax as per new rule of service tax wef 01-07-12.
2) what is cateria for abatemnet of tax on Rent a cab services, whether any undertaking is required to be taken from service provider to service receiver or not.

Dayal

Dayal (Expert)

19 June 2012 If the service provider is falling under the threshold exemption of 10 lacs, that exemption equally is available to the recipient.

Therefore you need to educate the service provider to mention such details on the Invoice to evaluate our liability in terms of reverse charge.

CA. DINESH KUMAR

CA. DINESH KUMAR (Expert)

02 August 2012 1. The liability of the service provider and service recipient are different and independent of each other. Thus in case the service provider is availing exemption owing to turnover being less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient shall have to pay service tax which he is obliged to pay under the partial reverse charge mechanism.
2. No need of undertaking, as service provider shall mention the amount of service tax only if he is not claiming abatement. As if he avail the abatement his liability of service tax is zero and service tax (40%) shall be deposited by service recipient.

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