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Reverse charge on remnting of car for carry passenger

satyendra kumar singh (Manager-Finance & Accounts) (100 Points)

08 August 2012

from 1st june 2012 onward more services has been included under reverse charge . I am facing problem on renting or hiring of motor vehicle to carry passenger services . because there is two category (i) on abated value (ii) on non abated value. can you clearify the difference between two values ...

For example--

1-on bated value - 100% service tax payable by service recipient

2-on non abated vale - 60% provider 40% service receiver.

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4 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 08 August 2012

Renting of motor vehicle is eligible for 60% abatement as an option. This means, if the charge is Rs.100, the value of service is Rs.40 and tax needs to be paid on this amount only.

CA Saiyum khan (Practicing CA) (685 Points)
Replied 08 August 2012

Hi Satyendra

Abated value means where the component of goods or material is not involved in the total value of services and non abated value is where the component of goods and material is involved. The relevant para of education guide has been paid for your reference. Hope your query is resolved.

How is the service recipient required to calculate his tax liability under partial
reverse charge mechanism? How will the service recipient know which abatement
or valuation option has been exercised by the service provider?
The service recipient would need to discharge liability only on the payments made by him.
Thus the assessable value would be calculated on such payments done (Free of Cost material
supplied and out of pocket expenses reimbursed or incurred on behalf of the service provider
need to be included in the assessable value in terms of Valuation Rules). The invoice raised
by the service provider would normally indicate the abatement taken or method of valuation
used for arriving at the taxable value. However since the liability of the service provider and
Income Tax return Forms Ay 2012-13
131
service recipient are different and independent of each other, the service recipient can
independently avail or forgo an abatement or choose a valuation option depending upon the
ease, data available and economics.

nilesh (Indirect Tax) (82 Points)
Replied 09 August 2012

Dear Expert,

if we take car from partership firm alongwith driver for a day to travel the employee from pune to mumbai, whether reverse charge is applicable for that.

please help.

Ashish Nawandhar (Officer (Accounts)) (20 Points)
Replied 09 August 2012

Originally posted by : CA Unnikrishnan Nair N
	Renting of motor vehicle is eligible for 60% abatement as an option. This means, if the charge is Rs.100, the value of service is Rs.40 and tax needs to be paid on this amount only.

Dear Sir,

I am a service receiver and I want to know that if service provider is claiming abatement under not. no. 13/2012 on renting of motor vehicle for carrying passangers, whether i will be allowed to take credit of service tax paid by us under reverse mechanism