Rent a cab service
This query is : Resolved
30 May 2013
i have following questions regarding service tax liability in case of RCM....
1. in case service provider is not availing benefit of Abatement, then what will be liability of service receiver? (receiver is corporate)
2. what is d difference between availing abatement or not availing abatement? (in case of receiver's side)
1. in case service provider is not availing benefit of Abatement, then what will be liability of service receiver? (receiver is corporate)
2. what is d difference between availing abatement or not availing abatement? (in case of receiver's side)
30 May 2013
SERVICE PROVIDER NOT A COMPANY
THEN RECEIVER DEPOSITE 100% SERVICE TAX ON CAB SERVCE
THEN RECEIVER DEPOSITE 100% SERVICE TAX ON CAB SERVCE
07 June 2013
thanx,, but what will be the percentage of service tax in case he is not availing benefit of abatement and not registered (less than 9 lacs value of service- service provider), and issue invoice without service tax separately charged.?
21 July 2025
Got it — you’re asking about the service tax liability under Reverse Charge Mechanism (RCM) for renting a cab service, specifically when the service provider is not availing abatement or not registered.
Let me break down your queries one by one:
1. If the service provider is NOT availing benefit of abatement, what will be the liability of the service receiver (corporate)?
When the cab service provider does NOT avail abatement, the service tax is payable on 100% of the value of the service.
Since this is under RCM, the service receiver (corporate) has to pay service tax on the full amount (100%) of the cab rent.
The rate of service tax applicable (as per the period you mentioned, 2013) would typically be 12.36% (including cess) unless specified otherwise.
So, the corporate has to pay 12.36% of the total cab rent as service tax under RCM.
2. Difference between availing abatement or not availing abatement (from receiver’s perspective):
Availing abatement means that the taxable value for service tax is reduced — typically, the service provider charges service tax on 60% of the gross amount (after abatement).
When abatement is availed, service tax is calculated on 60% of the total cab fare, so service tax liability on the receiver’s side under RCM is on 60%.
When abatement is NOT availed, service tax is calculated on 100% of the cab fare.
For the service receiver under RCM, this means:
If the provider avails abatement and charges service tax, then service receiver may not be liable to pay under RCM.
If the provider does not charge service tax or is unregistered, then the service receiver has to pay service tax under RCM on the full amount (100%).
3. If the service provider is not availing abatement, is unregistered (below 9 lakhs turnover), and issues invoice without service tax separately charged, what is the service tax percentage applicable for the receiver?
In this case, since the service provider is not registered and not charging service tax, the liability to pay service tax shifts to the service receiver under RCM.
The service receiver has to pay service tax at 100% value of the service.
The service tax rate applicable in 2013 was 12.36% (which includes the 2% Swachh Bharat Cess or Krishi Kalyan Cess if applicable; before cess introduction, it was 12.36% with education cess).
Therefore, the service receiver must pay 12.36% on the entire amount of the cab rent.
Let me break down your queries one by one:
1. If the service provider is NOT availing benefit of abatement, what will be the liability of the service receiver (corporate)?
When the cab service provider does NOT avail abatement, the service tax is payable on 100% of the value of the service.
Since this is under RCM, the service receiver (corporate) has to pay service tax on the full amount (100%) of the cab rent.
The rate of service tax applicable (as per the period you mentioned, 2013) would typically be 12.36% (including cess) unless specified otherwise.
So, the corporate has to pay 12.36% of the total cab rent as service tax under RCM.
2. Difference between availing abatement or not availing abatement (from receiver’s perspective):
Availing abatement means that the taxable value for service tax is reduced — typically, the service provider charges service tax on 60% of the gross amount (after abatement).
When abatement is availed, service tax is calculated on 60% of the total cab fare, so service tax liability on the receiver’s side under RCM is on 60%.
When abatement is NOT availed, service tax is calculated on 100% of the cab fare.
For the service receiver under RCM, this means:
If the provider avails abatement and charges service tax, then service receiver may not be liable to pay under RCM.
If the provider does not charge service tax or is unregistered, then the service receiver has to pay service tax under RCM on the full amount (100%).
3. If the service provider is not availing abatement, is unregistered (below 9 lakhs turnover), and issues invoice without service tax separately charged, what is the service tax percentage applicable for the receiver?
In this case, since the service provider is not registered and not charging service tax, the liability to pay service tax shifts to the service receiver under RCM.
The service receiver has to pay service tax at 100% value of the service.
The service tax rate applicable in 2013 was 12.36% (which includes the 2% Swachh Bharat Cess or Krishi Kalyan Cess if applicable; before cess introduction, it was 12.36% with education cess).
Therefore, the service receiver must pay 12.36% on the entire amount of the cab rent.
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