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

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.