Service tax on Vehicle Hire Charges

[Guest]

Respected All,

I have one quarry regarding RCM applicable on Vehicle Hire charges

Point 1: When company hire the any taxi/car for say one month or two month from local traveler, we pay the Service Tax on RCM basis,

But When some of our company employee travel and hire the taxi/car for one day or two day and they take the Invoice from traveler on his name and we just reimburse it,

In this case whether company is liable to pay Service Tax on RCM basis.

Point 2 : if in above case if employee take the bill in the name of company what should be impact.

Thank you very much

Sarjeet Rajani

AI Summary

Clarification on Service Tax Under RCM for Vehicle Hire: Taxpayer Depends on Invoice Name and Service Category. A query was raised about the applicability of reverse charge mechanism (RCM) for service tax on vehicle hire charges. The question involved two scenarios: when a company hires a vehicle for a longer duration and pays service tax under RCM, and when an employee hires a vehicle for a short duration, receives an invoice in their name, and is reimbursed by the company. Responses clarified that if the service is categorized under renting of motor vehicles, service tax under RCM is applicable. If the invoice is in the employee's name, the travel agency pays the tax; if in the company's name, the company pays the tax.