Rcm on rent a cab

I am little bit confuse about the following term in

(a)   in respect of  services  provided or agreed to be provided  by way of renting of a  motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business(service provider liability nil and receiver 100%)

(b)   in respect of  services  provided or agreed to be provided  by way of renting of a  motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business(service provider 60% and receiver 40%)

 

What is meaning of similar line of business.

 Pl advice.

Thanks
 

Replies (5)

Similar line of business means service provided to a person who is not himself doing business of renting or hiring of motor vehicle.

 

A is service receiver company

B is a service provider individual / firm/ huf

A & B both registered in service tax as Rent a Cab

C is third party

A raise a invoice to C with service tax @ 4.944%

B raise a invoice to A without service tax as per RCM

Is RCM applicable to A ?

A-B: No liability of Rent a Cab under RCM is applicable if both the parties are in similar line of business.

A-C: A being a service provider should not charge service tax on his bills since under rent a cab, 40% (4.944%) is receiver's liability. If A specifies on his bills that it does not avail cenvat credit, then receiver should not pay 40%. However, if he does not specify, then irrespective of whether he is charging ST on bills or not, receiver should dispose off his liability on 40%.

You mean

1. RCM not applicable to A

2.A charge service tax @ 4.944% to C 

Since A is a Company and a service provider in 2nd case, RCL to C will not be applicable. If A was individual/firm etc, RCL will be applicable to C

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