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Letting out of motor vehicles on hire

Service Tax (Legacy) 822 views 1 replies

Dear Members,

 

As per the new regime of service tax, in case of letting out of motor vehicles on hire by an individual or a firm to a company, reverse charge mechanism would be applicable.

 

In this regard, if an employee of a company hires a cab, and later on seeks the reimbursement from the company, is the company liable to pay tax under reverse charge mechanism, or this transaction would be treated as a separate transaction between employee and employer and thereby not subject to service tax?

 

Two scenarios may be possible:

  1. Bill obtained by the employee in his own name
  2. Bill obtained in the name of the company

 

I'm more concerned about the second scenario. Pls share your views in this regard. Hope you got my question.

Replies (1)
Yes you are correct, if the invoices are raised in the name of the Company, the revised guidelines are to be followed, but if the invoice is in the name of the employee, the service provider has to bill for ST in the invoice only, wherein the company will not be able to take any CENVAT Credit and it will be the cost for Company.


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