Query relating to service tax on Rent-a-cab services
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KIRTI TULSYAN
Jan 8, 2013, 12:41:29 AM1/8/13
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Dear All,
Kindly share your views on the following in respect of Rent-a-cab services.
As per Notification No. 26/2012- Service Tax (Abatement in respect of
certain specified services) Services in relation to Renting of any motor
vehicle designed to carry passengers is entitled to an abatement of 60% and
only 40% of the gross amount charged by the service provider is taxable.
However CENVAT credit on inputs, capital goods and input services, used for
providing the taxable service, has not been taken under the provisions of
the CENVAT Credit Rules, 2004.
As per Notification No. 30/2012-Service Tax (Reverse charge Mechanism)
Sl.No.
Description of a service
Percentage of service tax payable by the person providing service
Percentage of service tax payable by the person receiving the service
7
(a) in respect of services provided or agreed to be provided by way of
renting of a motor vehicle designed to carry passengers on abated value to
any person who is not engaged in the similar line of business
(b) in respect of services provided or agreed to be provided by way of
renting of a motor vehicle designed to carry passengers on non abated value
to any person who is not engaged in the similar line of business
Nil
60%
100 %
40%
Hence the liability of Service Tax rests upon both the service provider as
well as the service receiver in the above mentioned ratios respectively.
From the above it is clear that no input credit shall be availed when
payment is made while exercising the option of abatement. However is there
an option for the service provider to pay tax without opting the abatement
method and avail input credit on the same? In this case what will be the
liability of the service receiver?
Awaiting your early reply.
Thank you
Kindly share your views on the following in respect of Rent-a-cab services.
As per Notification No. 26/2012- Service Tax (Abatement in respect of
certain specified services) Services in relation to Renting of any motor
vehicle designed to carry passengers is entitled to an abatement of 60% and
only 40% of the gross amount charged by the service provider is taxable.
However CENVAT credit on inputs, capital goods and input services, used for
providing the taxable service, has not been taken under the provisions of
the CENVAT Credit Rules, 2004.
As per Notification No. 30/2012-Service Tax (Reverse charge Mechanism)
Sl.No.
Description of a service
Percentage of service tax payable by the person providing service
Percentage of service tax payable by the person receiving the service
7
(a) in respect of services provided or agreed to be provided by way of
renting of a motor vehicle designed to carry passengers on abated value to
any person who is not engaged in the similar line of business
(b) in respect of services provided or agreed to be provided by way of
renting of a motor vehicle designed to carry passengers on non abated value
to any person who is not engaged in the similar line of business
Nil
60%
100 %
40%
Hence the liability of Service Tax rests upon both the service provider as
well as the service receiver in the above mentioned ratios respectively.
From the above it is clear that no input credit shall be availed when
payment is made while exercising the option of abatement. However is there
an option for the service provider to pay tax without opting the abatement
method and avail input credit on the same? In this case what will be the
liability of the service receiver?
Awaiting your early reply.
Thank you
REPLY 1
Dear,
In my opinion and as per my understanding of law, once the liability is
casted upon the receiver to pay the tax (in case of payment by not availing
abatement ) it cannot be shifted to any other person ( service provider).
Further, the liability of receiver to pay tax remains intact.
Therefore, no option lefts for you in these facts and circumstances.
Regards,
Jeetu Gupta
Chartered Accountant
9873451380
In my opinion and as per my understanding of law, once the liability is
casted upon the receiver to pay the tax (in case of payment by not availing
abatement ) it cannot be shifted to any other person ( service provider).
Further, the liability of receiver to pay tax remains intact.
Therefore, no option lefts for you in these facts and circumstances.
Regards,
Jeetu Gupta
Chartered Accountant
9873451380
REPLY 2
Beware that the concept applicable here is the partial reverse charge
mechanism:
Let us assume that the chargeable amount is Rs.100
*Now let us take point no.7(b): (As your query is related to this specific
point only) *
chargeable amount Rs.100
Less:No abatement Rs. 00
Abated Value Rs. 100
Amount to be charged by the service provider on the bill is Rs.7.416 as
service tax(i.e.100*12.36%* 60% )
So, total amount of the invoice shall be Rs100+7.416=Rs.107.416
Therefore the service provider will deposit the service tax amount of
Rs.7.416 with the government which he has collected from the service
receiver.Also he can utilise the cenvat credit on input, input services and
capital goods to discharge his obligation.
And the service receiver will deposit an amount of Rs.4.944 with the
government directly to discharge his obligation and that too in cash
only.He cannot utilize the cenvat credit to discharge his part of
obligation.
Now let us take point no 7 (a):
chargeable amount Rs.100
Less:abatement Rs. 60
(i.e.100*60%)
Abated Value Rs. 40
Now here as the service provider has availed the abatement the invoice
value will only be Rs.100.
So here the service provider is neither collecting the service tax nor
depositing it with the government.
However the service receiver has to discharge his obligation by depositing
Rs.4.944 (i.e Rs.40 abated value*12.36%*100%) directly to the government.
I have given this example assuming all other conditions required for this
abatement have been duly complied with.(like individual, corporate body
etc.)
Hope it will solve your problem to some extent.
Regards,
CA Nareem Srinivas Rao
mechanism:
Let us assume that the chargeable amount is Rs.100
*Now let us take point no.7(b): (As your query is related to this specific
point only) *
chargeable amount Rs.100
Less:No abatement Rs. 00
Abated Value Rs. 100
Amount to be charged by the service provider on the bill is Rs.7.416 as
service tax(i.e.100*12.36%* 60% )
So, total amount of the invoice shall be Rs100+7.416=Rs.107.416
Therefore the service provider will deposit the service tax amount of
Rs.7.416 with the government which he has collected from the service
receiver.Also he can utilise the cenvat credit on input, input services and
capital goods to discharge his obligation.
And the service receiver will deposit an amount of Rs.4.944 with the
government directly to discharge his obligation and that too in cash
only.He cannot utilize the cenvat credit to discharge his part of
obligation.
Now let us take point no 7 (a):
chargeable amount Rs.100
Less:abatement Rs. 60
(i.e.100*60%)
Abated Value Rs. 40
Now here as the service provider has availed the abatement the invoice
value will only be Rs.100.
So here the service provider is neither collecting the service tax nor
depositing it with the government.
However the service receiver has to discharge his obligation by depositing
Rs.4.944 (i.e Rs.40 abated value*12.36%*100%) directly to the government.
I have given this example assuming all other conditions required for this
abatement have been duly complied with.(like individual, corporate body
etc.)
Hope it will solve your problem to some extent.
Regards,
CA Nareem Srinivas Rao
REPLY 3
Yes, service tax can be paid without abatement.
The tax will be payable as per 7(b).
Sanjiv Agarwal
The tax will be payable as per 7(b).
Sanjiv Agarwal
REPLY 4
Dear Sir,
Thank you for the reply. We request you for further clarification. In case
the service provider opts to pay without abatement, the liability of the
service provider will be 60% on the *gross value* or 60% on the* 40% of
gross value*? Also will he be eligible for input credit?
Regards
Kavya. N
-- Thank you for the reply. We request you for further clarification. In case
the service provider opts to pay without abatement, the liability of the
service provider will be 60% on the *gross value* or 60% on the* 40% of
gross value*? Also will he be eligible for input credit?
Regards
Kavya. N
Best Regards,
Kirti Tulsyan
B.Com.,ACA,CS
P.D.Rungta & Co.
Chartered Accountants
Board : +91 33 3028 2500 / 1
Direct Line : +91 33 3028 2502/3
Cell : +91 9830174619
Kirti Tulsyan
B.Com.,ACA,CS
P.D.Rungta & Co.
Chartered Accountants
Board : +91 33 3028 2500 / 1
Direct Line : +91 33 3028 2502/3
Cell : +91 9830174619
email: caktu...@gmail.com
Head Office:
21, Hement Basu Sarani, 3rd Floor , Room .No.317
Kolkata-700 001,West Bengal, India
Branches :
Bhagalpur | Khatima | Mumbai | Ahemdabad | Bangalore
Homepage : http://www.pdrungta.co.in/
“Save Paper! Save Trees! Before printing, Think about the environment”
A Candle loses nothing by lighting another candle" --- eServe
Head Office:
21, Hement Basu Sarani, 3rd Floor , Room .No.317
Kolkata-700 001,West Bengal, India
Branches :
Bhagalpur | Khatima | Mumbai | Ahemdabad | Bangalore
Homepage : http://www.pdrungta.co.in/
“Save Paper! Save Trees! Before printing, Think about the environment”
A Candle loses nothing by lighting another candle" --- eServe
nishan...@gmail.com
Nov 13, 2013, 4:47:58 AM11/13/13
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Sir,
Please let me confirm that if a service provider once opt a abatement option, Can SP change the option contract wise or else
Ankit Agrawal
Nov 14, 2013, 3:26:19 AM11/14/13
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Yes, Service tax can be paid without abatement. The liability of the service provider will be 60% of the gross amount, also he will be eligible for input credit.
Thanking You
Regards,
CA Ankit Kumar Agrawal
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