Reverse charge mechanism (rcm)
Querist : Anonymous
If aggregator is a rent a cab service provider and company is the customer..
then Who shall pay service tax ??
is it Company or the Aggregator??
Please kindly reply..
Querist : Anonymous
Please respond..
If a rent-a-cab aggregator provides services to a company,
Who is liable to pay the Service Tax — the aggregator or the company (customer)?
Quick explanation:
Under Service Tax rules (pre-GST):
The service tax on rent-a-cab services is payable under Reverse Charge Mechanism (RCM) by the recipient of the service if the service provider is:
A non-registered person or
When notified under specific conditions.
Generally, for rent-a-cab services, the tax liability is on the recipient of service (i.e., the company hiring the cab) under RCM.
Who is the aggregator?
A rent-a-cab aggregator typically acts as a platform connecting customers and cab providers.
The aggregator may or may not be the actual service provider.
Who pays Service Tax under RCM?
If the aggregator is the service provider and registered under Service Tax, then:
The aggregator charges and pays Service Tax (forward charge) to the government.
The company pays the aggregator inclusive of Service Tax.
If the aggregator is not registered or is just facilitating, and the cab owner is providing the service, then:
The company (recipient) is liable to pay Service Tax under Reverse Charge on the rent-a-cab service.
Summary Table
Scenario Who pays Service Tax?
Aggregator is registered service provider Aggregator pays (forward charge)
Aggregator is non-registered or platform only Company pays under Reverse Charge
Note:
This is based on pre-GST Service Tax law.
Under GST (post July 2017), the treatment might differ.
The agreement and actual flow of services affect tax liability.
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