Service Tax provision for hiring of motor vehicle

[saurabh bhatiya]

Dear Sir,

We are ltd company & hiring motor vehicle along with driver on contractual basis for the year & pay bill monthly to contractor.

My query is that

1) whether this service fall under reverse charge mechanism or not & if yes , what will be percentage?

2) Is there any abatement notification for this service?

Please reply...

AI Summary

Reverse Charge Mechanism Applies to Motor Vehicle Rentals for Corporates, Abatements Referenced in Notification No.26/12-ST. A company inquired about the applicability of the reverse charge mechanism (RCM) and potential abatements for hiring motor vehicles with a driver on a contractual basis. It was clarified that renting motor vehicles for passenger transport falls under RCM, requiring the service receiver, if a body corporate, to pay service tax. However, if the contractor is also a body corporate, RCM does not apply. References were made to Notification No.26/12-ST for abatements and Notification No.30/12-ST for RCM details. The responses were in agreement on these points.