renting of mid size transport vehicle ( tata 407 etc.)

[vinay kumar]

dear sir,

one of  our client  providing transportation vehicle on rent to courier agencies and now he wants to register under service tax.

therefore I wants to know that in which head the above service  will categorized.

Thanks

Vinay kumar

[Viswanathan Nemmara]

Renting of motor vehicle will be covered under clause (f) of section 66E of the Finance Act, 1994 (as amended upto date).  Definition of "motor vehicle" is very wide and will include your client's vehicles.  Thus the service will be classified under "Renting of Motor Vehicle" under which 60 percent abatement is available for the service provider and if your client is not a registered corporate entity (Limited Company) then under Reverse Charge mechanism, the service receiver will pay service tax on 40 percent of service value.  Alternately, your client need not avail the abatement and pay service tax on 60 percent (if it is not a registered corporate entity) and pass it on to the service receiver.

AI Summary

Renting of motor vehicle: service tax classification with abatement and reverse charge for non corporate suppliers.
Renting mid size transport vehicles is classifiable as Renting of Motor Vehicle under clause (f) of section 66E, the statutory definition of "motor vehicle" covering such vehicles. A prescribed abatement reduces the taxable base for the service provider, and where the provider is not a registered corporate entity the reverse charge mechanism requires the service receiver to pay tax on the residual value; alternatively the provider may forego the abatement and account for tax accordingly.