Whether hiring of taxis from transporter attract both DVAT and service tax ? Some transporters have got registered themselves with DVAT and now claim that VAT @ 12.5% is also payable in addition to service tax @ 12.36 on the tax invoice. Is it correct. Clarify with supporting caselaw or the provisions (if possible).
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VAT & SERVICE TAX
Replies (2)
yes this is the correct position of law.
VAT registration is required for paying tax on right to use the assets (Not on sale of goods)
and service tax is required to paid under car rental maxicab etc.
Service tax is charged on renting a cab service @ 12.36%. However Abatement of 60 % is also available on renting a cab service. Hence net effective rate will be 4.8 % + 3 % EC.
Our openion on VAT is that vat is also leviable on renting a cab under Right to use of property.
Vat rate is 12.5 % however some deduction is also allowed under DVAT.
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