SERVICE TAX PAYMENT

[SURYAKANT MITHBAVKAR]

We have received bill from travel agent for vehicle hire charges who is registered under Service tax act.

Regarding service tax he has mentioned service tax to be paid by service recipient by virtue of Notification No.30/2012 ST dated 20.06.2012 .

The above case if we want to take service tax credit can we pay 100% service tax and take credit for the same.

Pl. advice

[Ganeshan Kalyani]

You will have get clarification from your service provider that whether he has availed abatement. If the answer is in affirmative then you will have to pay 100% service tax on abated value. if the answer is no then you will have to pay service tax on 50% of service value and balance will be paid by the service provider. Further the input tax credit on vehicle hire is not allowed.

[DR.MARIAPPAN GOVINDARAJAN]

If the travel agent is owning the said vehicle then the credit may be eligible, in my view, otherwise it is not eligible.

AI Summary

Service tax on vehicle hire: recipient's payment obligation depends on abatement and supplier ownership, credit generally restricted. Service tax liability for vehicle hire supplied by a travel agent hinges on abatement and ownership: if the supplier availed abatement, the recipient pays tax on the abated value; if not, the recipient pays tax on fifty percent of the value with the supplier liable for the remainder. Input tax credit on vehicle hire is generally disallowed, though it may be claimable where the travel agent owns the vehicle.