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Service tax reversal for car hire

murugan (accountant) (22 Points)

08 January 2017

Car hired to carry cash from one branch to another branch by bank due to demonistation.Is service tax reversal payable by bank? Please clarify.

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 08 January 2017

Yes, Servise tax under RCM is applicable.

Nagendra Hegde (Chartered Accountant) (1948 Points)
Replied 09 January 2017

Dear Mr. Murugan,

Sec 68(2) of Fin Act' 94 read with Notifcation 30/2012-ST provides for reverse charge mechanism where in S.No 7 of the said notification requires service receiver to pay service tax in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers to any person who is not in the similar line of business.

in the instant case, since banks who are not in the similar line of business, the cars designed to carry passengers are if hired by them, then service tax shall be paid on 40%/50% of the value depending on abatement/without abatement.