Urgent - rcm on hiring or renting of motar vehicle

This query is : Resolved

pankaj pathak (Querist)
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29 August 2014 There is a party A who provides motor vehicle on rent,with whom a party named B had contracted for the supply of motor vehicle. In this contract, a clause is mentioned as "the prices will be inclusive of all charges including taxes"
party a raises a bill of amount Rs.2109 to party b
party a is availing abatement so party b will caculate service tax as
2109*40%*12.36%=104.269
now my question is
which option is correct for payment to party A-

option 1
paid to Party A 2109-104.269=2004.731
and party B should deposit Rs. 104.269 as st to gov.
option 2
paid to party A 2109
and party B should deposit Rs. 104.269 as st to gov.from his own

Annu Agarwal

Annu Agarwal (Expert)
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01 September 2014 If the amount of service tax is included in 2109,then as per Option A
Value of Taxable Services would be 2109/1.04944=2010
and service tax would be 2109-2010=99
In that case you would pay 99 to goverment and 2010 to service provider i.e.party A.

Please confirm with the service provider does the prices are inclusive of service tax or not.

Generally in case of reverse charge the service provider does not charge service tax in his bill.So if that is the case,Option B is applicable.

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