sagar (Audit Assistant) 24 August 2012

Servise tax reverse charge mechanism

Hello my name is sagar: We usually hire rental cab on monthly rental basis in which we do contract that Diesel for rental cab will provide by us (service receiver) Rent of CAB( Paid by company to CAB operator) – Rs. 24000/- Cost of Diesel (Provide by company) – Rs.12000/- Rs.36000/- In case of reverse charge mechanism, if CAB operator status is Individual/ HUF/ Firm/ BOI then service receiver liable to pay service tax @ 4.994%. I would like to know on which amount we have to pay service tax in case of reverse charge mechanism and service provider status is Individual/ HUF/ Firm/ BOI. On Rs 24000/-? or On Rs 36000/-?

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NARAYANAN.P.POTTY (ADVOCATE) 19 November 2012

For rent a Cab operators the service Tax liability is as followws.w.e.f 01-.07-2012 From the Gross Value of receipt 60% abatement can take and Service Tax liability will be only for 40%.So the net Service Tax liability will be 4.94% (40% of 12.36) on Gross Value. Under the Reverse Charge Mechanism the Service Tax liability should be shared between the Service provider and Service recepient as follows When the transporter is a Pvt Ltd or Ltd company the Servive Tax liability is up on tour operator. When the transporter is an Individual or partnership firm the service tax liability is sahred by transporter and tour operator in the ratio 60:40 ie 60% by the service provider and 40% by the service recepient. Regards Narayanan.P.Potty Advocate