TRANSPORT CARRIAGE V/S RENT A CAB

[abbas mukhi]

SIR,

AT PRESENT SERVICE TAX ON RENT A CAB SERVICE COULD NOT BE OBTAINED AND IT BECOMES EXPENSE FOR THE COMPANY.

AS PER SERVICE TAX PROVISIONS "CONTRACT CARRIAGE FOR PASSENGER" IS EXEMPTED (FOR NON AC) VIDE NOTIFICATION NO.6/2014-ST DATED 11.07.2014..

CAN WE PLAN TO SWITCH OVER FROM RENT A CAB TO CONTRACT CARRIAGE.SO AS TO SAVE EXPENSE ON SERVICE TAX PAID UNDER RCM ON RENT A CAB

THANKS...

[Rajagopalan Ranganathan]

Sir,

Sl. No. 23 (b) of Notification No. 25/52012-ST dated 20.6.2012 as amended state that non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire.

It excludes non-air-conditioned contract carriages acquired for tourism, conducted tour, charter or hire. In you case either you will charter the carriage or hire the same for transporting you employees to and from dwelling place to factory and back. In my view the exemption is granted for public transport system.

[Ganeshan Kalyani]

Sir, I agree with the views submitted by Sri Rajagopalan Sir. After going through the relevant Notification the conclusion is that only public transport system is exempted. Thanks.

AI Summary

Contract carriage exemption does not cover hire or charter for employee transport, so service tax under reverse charge remains applicable.
Exemption for non-air-conditioned contract carriage covers passenger transport as part of public transport but excludes tourism, conducted tours, charter or hire and radio taxis; therefore transporting employees by vehicles provided on hire or charter will not fall within the exemption and will remain subject to service tax under the reverse charge framework.