Reverse tax machanism

Tour operator services : under this category , we are tour packages for our guests which include hotel booking ,transfer(cab operator),guide service etc.., we are in the practice of remitting service tax @ 4.5% on the total bill amount. for the transfer involved in this package . we usely hire service from out side cab operator and reccive invoice wit and without service tax ,in this case , what will be our service tax liability under the reverse tax mechanism ,if we are liable to pay service tax.on the above case ,can claim input tax for the applicable service tax remittted on cab operating service
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Yes you are eligible for Input tax credit for the service tax paid under reverse Charge... as it is used in generating the output services... but input tax credit cannot be used to setoff the service tax liability under reverse charge... so you should pay the service tax on Reverse charge and avail.. input credit...

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