Service tax on car rentals for recipient

We are a partnership firm into Trade Business of Industrial Goods and have service tax registration and have been paying service tax for 'Fabrication & Erection' Job works we undertake.

We heard that effective 1-Jul-12, service tax has been made applicable on "Car Hire"  also.

We occasionally hire cars for visit to clients... say once in two-weeks or so just for a day or two.

My Question is:

1. As a recipient are we entitled to pay service tax on this service received under reverse charge mechanism?

2. Is it applicable even if say for a Pvt. Ltd. Company who is NOT registered under Service Tax.. as it does not come in its perview.

 

Replies (1)

Rent a cab services are taxable under Reverse Charge Mechanism(RCM) but the condition is that, the service should be rendered by a non corporate to a body corporate.

Here in your case as you are a partnership firm RCM in rent a cab service does not apply to you.

You are not liable to pay service tax.

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