Reverse Charge rent a car

[Rajeev Kedia]

On what amount a car provider will charge service tax -

1. On Full amount

2. On abatment value

3. Do not charge as paid by service receiver.

[YAGAY and SUN]

Sr. No.	Description of a Service	Percentage of Service Tax payable by the person providing service	Percentage of Service Tax payable by the person receiving service
1	In respect of service provided or agreed to be provided by way of renting a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business.	Nil	100%
2	In respect of service provided or agreed to be provided by way of renting a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business.	60%	40%

AI Summary

Reverse charge for rent-a-car services shifts tax liability to service receiver for abated supplies and partly to provider for non-abated.
Allocation of service tax under the reverse charge for passenger motor vehicle rentals depends on whether the supply is on an abated or non-abated value. For abated-value supplies to persons not engaged in the same business, the provider is nil liable and the receiver is 100% liable. For non-abated-value supplies to such persons, the provider is liable for 60% and the receiver for 40% of the service tax.