Whether considered as Non Monetory Consideration ?

[paresh ayadi]

Sir,

We have hired security agency for our company

We apart from regular monthly payments provide them facility of 'cars for official purpose, quarter for residence , payment of mobile bills..'

We are paying Service Tax under RCM (security agencies) on monthly payment and monetary value of residance

However we are not adding 'car rental charges and mobile bills' under non monetary consideration as we are paying service tax under RCM for car rentals and mobile post paid bills'

Whether our practice is confirming with service tax rules...

[KASTURI SETHI]

Car rental charges, mobile charges, residential charges cannot be called non-monetary consideration.

[paresh ayadi]

Sir,

Can you please guide further ?

[KASTURI SETHI]

See the definition of 'Consideration' under Section 67 of the Finance Act. Service Tax is payable on 'Gross Amount Charged'. No deduction/abatement is admissible from the gross amount charged to arrive at the taxable value.

[Ganeshan Kalyani]

Sir, if car facility is given to security agency then you would be adjusting the value of such benefit from their bill. As a result you only pay amount and thereby pay tax on net amount. And separately for rent-a-car service you also pay service tax under reverse charge. Please elaborate your query a little more. Thanks.

AI Summary

Consideration under tax law: non monetary benefits like cars and bills treated as taxable consideration on gross receipts. Car rental charges, mobile bills and residential charges provided to a security agency are not non monetary consideration. Service tax is payable on the gross amount charged by the service provider with no deduction or abatement allowed. Separate services like rent a car or mobile postpaid may attract tax under the reverse charge mechanism, and any value adjustments for benefits must be reflected in invoicing and tax accounting so tax is paid on the correct gross taxable value.