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

[Rama Krishana]

As long as the services are falling under the category of renting of motor vehicles, service tax is required to be paid on reverse charge basis, irrespective of the fact that it was procured directly by the company or through employee.

[Himansu Sekhar]

Situation 1. The bill is name of the individual employee. The Stax will be paid by the travel agency. You have not received the service ,only reimbursed it. It is not the rent a cab service received by the company. The travel expenses through any models reimbursed.

Situation 2. Bill is in the name of the company. Company receives the service. Then he allots it to the employee. Company will pay the service tax.

It is my view .

AI Summary

Reverse charge on vehicle rental: liability depends on whether the invoice is issued to the company or the employee. When a company avails renting of motor vehicles for business, Reverse Charge Mechanism applies to the company as recipient even if engagement is through an employee. If the employee is invoiced in their own name and the company only reimburses the cost, the supplier remains liable and the company is not the RCM recipient; if the invoice is issued to the company, the company is the recipient and must discharge service tax on reverse charge.