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

Company's Service Tax Practice Questioned on Car Rental and Mobile Bills Under RCM A company hired a security agency and provides additional benefits such as car use, housing, and mobile bill payments. They pay Service Tax under the Reverse Charge Mechanism (RCM) on monthly payments and the monetary value of housing but not on car rental and mobile bills, as these are taxed separately. A participant clarified that car rental, mobile, and residential charges are not non-monetary considerations. Another participant referenced the Finance Act, emphasizing that Service Tax is based on the gross amount charged without deductions. Further guidance was requested on whether the company's practice aligns with service tax rules.