Service tax payment under reverse charge on rent a cab service

[SANDESH SHINDE]

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.

AI Summary

Clarification on Reverse Charge Mechanism: Service Receiver's Tax Liability for Rent-a-Cab Services as per Notification 10/2014. A query was raised regarding the payment of service tax under the reverse charge mechanism for rent-a-cab services, effective from October 1, 2014, as per Notification 10/2014. The question concerned the service receiver's liability to pay 50% service tax on the bill amount, regardless of whether the service provider charged service tax on 60% or not at all. The response clarified that if the service provider does not charge service tax, the service receiver must pay tax on 50% of the service value. If the provider charges service tax on 60%, the receiver pays tax on 50% of 40% of the total service value.