Service tax on rent a cab

Explanation about the abetted and non-abbeted scheme under rent a cab service under Reverse charge mechanism,

If service provider avails abatement, 100% (after abatement of 60% =40%) liability of service tax is to be discharged by service recipient.Recipient can take full credit of service tax paid .Full credit means (40% ST paid). No cenvat credit to service provider availing abatement.

Abatement of 60% is admissible vide Notification No.26/12-ST dated 20.6.2012 as amended vide Notification No.No.8/14-ST dated 11.7.14.(ST is on 40% of value)

If service provider does not avail abatement, ST is to be paid on non-abated value and then ratio of payment of ST would be 50 : 50 i.e. 50% ST by Service Receiver and 50% by service provider. (Notification No.30/12-ST dated 20.6.12 as amended vide Notification No.10/14-ST dated 11.7.2014). 60 : 40 changed to 50 : 50 vide Notif. No. 10/14-ST dated 11.7.2014.

If service provider avails threshold exemption limit of ₹ 10 lakhs and does not pay ST being within exemption limit, service recipient will discharge his own liability i.e. 50% of 40%.

Non-abated value means not availing abatement and abated value means availing abatement.

No certificate or document is required from service provider to the effect whether he has availed abatement or not. Invoice of service provider is itself proof whether he has availed small scale exemption or not; whether he has availed abatement or not. Service recipient is responsible for his own liability. Service receiver has no concern with liability of service provider.

Courtesy Mr. Kasturi Sethi

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