Service tax payment under reverse charge on rent a cab service

[Guest]

Dear Sir,

AS PER NOTIFICATION 10/2014 DATED 11.07.2014 IS SERVICE RECEIVER W.E.F 01.10.2014 WILL BE LIABLE TO PAY SERVICE TAX UNDER REVERSE CHARGE BASIS ON RENT A CAB SERVICE ON 50% OF THE BILL AMT EVEN IF SERVICE PROVIDER IS CHARGING ON 60 % OR NOT CHARGING SERVICE TAX AT ALL.PLEASE EXPLAIN , THANKS and REGARDS.

[Pawan Kast]

Dear Sir,

In this notification only payment of service tax was changed and all other provisions are as it is, means in earlier provisions if service provider were not paid charged service tax in invoices than service receiver should pay 100% service tax on value of services received and if service provider is Paid service tax than service receiver should pay service tax on 40% value of total services,

and as per new provisions if service provider is not paid service tax than service receiver should pay service tax on 50% value of services only and even if service provider is paid service tax on 60% value than service receiver should pay service tax on 50% value of 40% of total service provided.

AI Summary

Reverse charge liability on rent-a-cab services requires the service receiver to pay tax on half the service value. Notification 10/2014 revised reverse-charge payment for rent-a-cab services so that the service receiver must pay service tax on fifty percent of the service value. Other provisions remain intact: previously a receiver paid tax on the full value where the provider did not charge tax and paid on a smaller portion when the provider had charged tax; the amendment fixes the receiver's payment obligation at fifty percent irrespective of the provider's invoicing allocation.