Service tax on Rent Cab under reverse charges

[Krishan Gopal]

Sir, would you give clarification on service tax on renting of a motor vehicle under reverse charges-

what is the difference between abated value and non abated value, if non abated value then service provider pay service tax on 50% value of service.

Gopal

[Satbir singh wahi]

Non abated value means without abatement i.e. on full value.if the bill of ₹ 5000 then 50 % of it will be subject to 12.36% by provider .

[Krishan Gopal]

Sir,

Please, I want more clarity.

Gopal

l

[Rajagopalan Ranganathan]

Sir,

Non-abated value means the full value of charges raised on you by the motor cab owner. In this case you can avail the credit of service tax paid on the input services availed b y you. Abated value means, if the aggregate charges raised against you by the motor cab owner if ₹ 5,000, then you have to pay service tax on 40% of ₹ 5,000. For availing the abated value there are certain conditions stipulated against Sl. No, 9 of Notification No. 26/2012-ST dated 20.6.2012 and this notification is with effect from 1.7.2012.

[Krishan Gopal]

Thanks to all for given your input.

Gopal

[Ganeshan Kalyani]

As per notification no.30/2012 as amended the service payable is on 50% of car hire charge w.e.f. 01.01.10.2014.

AI Summary

Reverse charge on motor cab rent: taxable base may be full or abated, altering who bears service tax burden.
Reverse charge on renting motor vehicles hinges on whether the taxable base is the non abated value (full charges raised by the cab owner) or an abated value (a reduced taxable portion); notifications and subsequent amendments cited in the discussion prescribe the applicable reduced taxable portion, which determines the taxable base and availability of input tax credit.