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Service tax on radio taxi service

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Ashit Parmanick

Article

21 Points Posted on 06 August 2013

Question: A Company providing radio taxi service is giving its cab to its chauffer and charging a monthly rental of Rs 22,000 which includes Road Tax and Insurance.

The Company has taken the cabs on loan from a bank and pays a monthly installment of Rs 14,800.Currently bank is the owner of the cabs.

The ownership of cab will be transferred to the chauffer when the loan is repaid fully by Company, till then Company will continue to charge Rs 22000 from the Chauffer. The chauffer will not pay any kind of money to the Company except monthly rental.

1.Whether Service tax will be charged from Chauffer or not on billed amount i.e, Rs 22000 ?

2.Under which head this rental income shall be booked?

Replies (1)

Prabhat Kumar

Advocate & Consultant

1820 Points Posted on 07 August 2013

It is a declared service as per section 66E(f) and (g) of the finance act and here the service provider is company.so, the Service Tax will be payable by the service provider on the 40% of the gross amount charged.This abatement is available to the service proder only if Cenvat Credit is not taken on the inputt or input service.So,you should charge the Service Tax from the recepient of Service.