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...

[KASTURI SETHI]

Dear Saurabh Ji,

For abatement see Notification No.26/12-ST as amended. (Serial No.9).

For RCM see Notification No.30/12-ST as amended (Serial No.7 (a) & 7 b)

[venkatesh B]

Dear saurabh Ji,

Renting of motor Vehicle designed to carry passengers comes under the ambit of Reverse charge mechanism, and service tax to be paid on reverse charge basis by service receiver, if the receiver is a body corporate which is applicable in your case.

Further kindly note that if the above services are received from body corporate then Reverse charge provisions will not be applicable (i.e., if contractor is body corporate then reverse charge not applicable)

Kindly follow the Notifications give by Shri KASTURI SETHI ji, (also thanks to Shri KASTURI SETHI ji for providing these notification details)

[Ganeshan Kalyani]

I agree with the views submitted by both the experts. Thanks.

AI Summary

Reverse charge liability for hiring motor vehicles with driver applies to corporate service receivers, with abatement provisions. Renting or hiring of motor vehicles designed to carry passengers, procured by a body corporate with driver on a contractual monthly basis, is subject to the Reverse Charge Mechanism with the service receiver liable for service tax; reverse charge does not apply if the service provider is a body corporate. Abatement for this service is available under Notification No.26/12-ST (Serial No.9 as amended), and the reverse charge rule is set out in Notification No.30/12-ST (Serial No.7(a) & 7(b) as amended.