Service tax payment under reverse charge on rent a cab service

[Asked by 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.

As per above query please clarify the given notification because in the notification it is clearly mention 50 and 50 % each so please clarify for the same, Please mention on what percent service tax payment will be applicable for Service receiver.Thanks and Regards.

AI Summary

Reverse charge on rent-a-cab service: recipient bears full liability if provider claims abatement; otherwise liability is shared.
Reverse charge liability for rent-a-cab services depends on whether the provider claims abatement. If the provider bills after claiming the 60% abatement, the service recipient is solely liable to pay service tax under the reverse charge mechanism on the taxable portion. If the provider bills on full value without claiming abatement, liability is split: the recipient pays half of the service tax and the provider pays the remaining half. Notification No.10/2014-ST amended Notification No.30/2012-ST to effect this allocation. Input tax credit eligibility is contested: some contend credit is available if the vehicle is capital goods of the provider; others maintain credit is not available on rent-a-cab services.