Service tax on rental

This query is : Resolved

KAVITTHA HEMATHRI (Querist)
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11 October 2012 Dear Sir,

Service tax to be charged on rent payable is 12.36%. One of my customer is asking, as per the Notification No.30/2012 25% of service tax payable by the person providing service and balance 75% of service tax payable by the receiving the service. please inform weather it is 12.36%? or 3.09%?

MOHAMMAD SALIM

MOHAMMAD SALIM (Expert)
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11 October 2012 First it is not clear in the querry which renting is referred to as only renting of motor vehicle designed to carry passengers to any person who is not engaged in the similar line of business, is covered under reverse charge mechanism at Sr No 7 of the Notification No 30/2012 dated 20th June, 2012.

Here the rule is in case of abated value 100% service tax would be paid by service recipent and in case of non-abated value 60% tax would be paid by service provider and 40% by service recipient.

It is important to note here that as per notif No 26/2012 , 60% abatement is available for renting of motor vehicle.

Accordingly if bill of Rs 100 is issued and service tax @ 12.36% would be applicable on the net value after abtement i.e. Rs 40. Accordingly service tax would be Rs 40X 12.36% = Rs 4.94 i.e. effectively 4.94%.

Hope this would settle the issue.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 October 2012 Notification 30/2012 is for,among others,renting of motor vehicle designed to carry passengers . The tax rate therein is 4.944%(applicable to recipient) and 7.416% (to be charged by provider)

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