Reverse charge mechanism on rent a cab sevice

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Rameswara Babu V

M.Com

21 Points Posted on 16 June 2015

Hi,

I have a query in RCM - Rent a cab service.

A vendor has taken abatement of 60% under Rent a cab service. while billing he charged service tax @ 4.944% along with hire charges. ( Bill date 1/5/15. Pyment was also made earlier )

My question was whether we need to pay the Service tax amount directly to government under RCM or we need to pay the ST to vendor as he charged the same in his bill.

Please explain. Thanks in advance

Rameswara Babu

Replies (2)

Gaurav Sharma

Student CA Final

24 Points Posted on 21 June 2015

Sir, You are required to pay service tax amount charged by the vendor @ 4.944% to him only.

Kashish Gupta

B.com (H) ACA

268 Points Posted on 21 June 2015

As per amendment made in NN 26/2012 w.e.f. 01.10.2014

Abatement is available only in respect of Renting of Motor Cab and Partial Reverse Charge is applicable on Motor Vehicle (Motor Cab/Bus/Maxi Cab) designed to carry passengers.

As per section 68(2), if RCM is attracted Service receiver is the person liable to pay service tax.

As Service Provider has claimed abatement, service tax of 100% is required to be paid by Service Receiver (as abated value)

If the Service Provider is Individual/HUF/Partnership Firm/AoP and service receiver is Business Entity registered as Body Corporate located in the Taxable territory, Service Receiver shall pay service tax @ 4.944% to the CG. Payment to service provider shall be made exclusive of service tax as service tax is not required to be levied on the invoice because 100% ia payable under RCM. It would amount to renegotiation of service and service provider would be able to adjust the service tax paid by him.