Pradeep Jain - Chartered Accountant

Query

(Deepak Dalvi) Posted On: 15 Oct, 2014

Respected sir, I have query related to a rent a cab service: Condition 1: Service Provider: Individual and registered under service tax. Service Receiver: Company Service tax liability: for receiver & provider Condition 2: Service Provider: Individual and not registered under service tax. Service Receiver: Company Service tax liability: for receiver & provider 3. Is Service Tax charged in the bill by service provider, a. if yes then how much. b. If not , then service tax liabilty to pay as a service receiver is 40%, which is paid to govt. by challan. then what about 60%. how to show in the return. whether to take abatement or exemption.please also mention the notification for this. Regards, Deepak

For rent a cab service, there is abatement notification which prescribes that only 40% of the taxable value is leviable to service tax provided no cenvat credit is taken. However, the provision of reverse charge mechanism is applicable if rent a cab service is provided by individual/HUF/partnership firm to business entity registered as body corporate. Further, in case the benefit of abatement notification is availed, the liability to pay service tax to the government is on service recipient under full reverse charge. However, if the benefit of notification is not availed by the service provider, then 50% liability is to be paid by service provider and 50% by the service recipient. Before budget 2014-15, it was 60% for service provider and 40% for service recipient. Reverse charge is applicable irrespective of the fact whether the service provider is registered or not if the required conditions are satisfied. If the service tax is charged by the service provider, it means that it is partial reverse charge when no abatement is being claimed. In such a case, service tax is payable on entire value and in the return, we will mention only the notification no. 30/2012-ST dated 20.06.2012 which specifies the percentage of tax payable by service provider and service receiver in the exemption notifications. The purpose of mentioning notification no. 30/2012-ST is to clarify the percentage of service tax payable. If 100% service tax is paid by the service receiver, then abatement is also availed. Consequently, service tax is paid on 40% of the value and notification no. 30/2012-ST dated 20.06.2012 will not be mentioned because 100% service tax is paid by receiver. {Query replied by:- CA Neetu Sukhwani}

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