Rent-a-cab

[Asked by Guest]

Sir,

Rent-a-cab service provided by individual to only one limited company and having turnover between 10 to 12 lacs. Said individual is not charging service tax to the company. In this case, let know the liability of Individual and company...

[Ganeshan Kalyani]

The service provider shall not pay service tax if he has taken abatement, otherwise yes. The liability shall be paid by him on 50% of the Value of service.

The said service is covered under reverse charge hence the corporate body is liable to pay service tax on 50% of Value of service.

Sir, still i am not clarified. Can you clarify in details. Rent-a-cab service provider is not charging service tax on service reciver.

[Ganeshan Kalyani]

Rent a cab service fall under reverse charge. If service provider is an individual , huf , Firm and the recipient of service is a body corporate then service tax shall be paid by both service provider and service receiver in the propotionate as given in notification no. 30/2012.

Two way of paying service tax which is explained below.

1) The service recipient shall pay service tax on 50% of Value of service and service provider shall pay service tax on 50% of Value of service. The condition for the same is that service provider should have not opted for abatement.

2) if the service provider opted for abatement then service recipient shall pay service tax on 40% of Value of service and service provider shall not pay any tax.

AI Summary

Reverse charge for rent a cab: corporate recipients must bear a share of service tax; abatement shifts allocation to recipient.
Rent a cab services by an individual to a body corporate fall under the reverse charge mechanism, allocating service tax liability between provider and recipient. If the provider has not taken abatement, tax is apportioned between the provider and the corporate recipient in the proportions specified by the notification. If the provider has opted for abatement, the recipient bears the tax on the taxable proportion specified while the abated provider has no tax liability on the remaining portion.