Rent a Cab Service

[Guest]

Hi,

Rent cab service - the service tax amount claimed by (Registered) service provider on 40% of the total value, My question is who has to pay the service tax amount (service provider or receiver)? shall i provide the service tax amount to the provider?

[CSSANJAY MALHOTRA]

Serial No. 9 of Notification No. 26/2012-ST dated 20.06.2012 provides for levy of Service Tax on Rent-a-Cab Service.

Value for the Purpose of Service Tax

Service Tax is payable on 40% Value of the Invoice PROVIDED CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 by the Service Provider.

Payment of Service Tax

Notification No. 30/2012-ST dated 20.06.2012 (Serial No. 7) provides for payment of Service Tax under Reverse Charge System i.e. the Person receiving the Service has to pay Service Tax.

In case of Abated Value (Tax to be levied on 40% of Invoice Value) i.e. when no CENVAT has been availed by provider of Service on Inputs, Capital Goods and Input Services, then SERVICE RECEIVER has to pay 100% Service tax liability.

In case of Unabated Value till 30.09.2014 (Tax to be levied on 100% Invoice Value) i.e. when CENVAT Credit has been availed by provider of Service on Inputs, Capital Goods and Input Services, then SERVICE RECEIVER has to pay Service tax liability on 40% Value & SERVICE PROVIDER has to pay Service Tax liability on 60% of the Invoice Value.

In case of Unabated Value from 01.10.14 onwards (Tax to be levied on 100% Invoice Value i.e. when CENVAT Credit has been availed by provider of Service on Inputs, Capital Goods and Input Services, then SERVICE RECEIVER has to pay Service tax liability on 50% & SERVICE PROVIDER has to pay Service Tax liability on 50% of the Invoice Value.

[Ashok Patil]

Perfect answer, nicely explained

AI Summary

Reverse charge on rent a cab makes the service receiver primarily liable for service tax under specified valuation rules. Service tax on rent a cab is levied on an abated basis-tax on 40% of invoice value where the provider has not taken CENVAT credit; where CENVAT is availed the value is unabated. Payment is under the Reverse Charge Mechanism, so the service receiver is generally liable; in the abated case the receiver pays the entire tax, while in the unabated case the tax liability is apportioned between receiver and provider according to the provider's CENVAT position.