RENT- A- CAB SCHEME OPERATORS

Date of Introduction: 01.04.2000 vide Notification No.3/99-ST dt.28.02.1999.

Definition:

“Rent a cab scheme operator” means any person engaged in the business of renting of cabs. (Section 65(59) of Finance Act, 1994 as amended)

The new definition of rent a cab scheme operator introduced in the Finance Act, 1998, is effective from 16^th October, 1998 onward. This definition is wider in scope than the earlier definition which only included a person who was the holder of a licence under the Rent-a-Cab-Scheme, 1989 framed by the Central Government under the Motor Vehicles Act, 1988 (59 of 1988), as a rent-a-cab­scheme operator.  Under the Rent-a-Cab-Scheme, 1989 framed under the Motor Vehicles Act, 1988, a licence is granted only in case a person has a minimum of 50 cabs. This meant that a person who had less number, say 5 or 10 cabs and was also engaged in the business of car rental was not liable to pay Service Tax on the services of renting of cabs. Consequent upon the revised definition, which has a wider scope, such persons who are engaged in the business of renting of cabs even if not covered under the Rent a Cab Scheme, 1989, framed under the Motor Vehicles Act, 1988, will also be now required to pay Service Tax on the services of renting of cabs. (Ministry’s F.No.B11/3/1998-TRU dt.07.10.1998)

Taxable events and scope of service:

The taxable service rendered by a Rent a cab scheme operator means any service provided to any person, by a rent a cab scheme operator in relation to the renting of a cab.

(Section 65(72)(o) of Finance Act, 1994 as amended)

Value of the Taxable Service:

The value of taxable service shall be the gross amount charged by the service provider for such service rendered by him.

 (Section 67 of Finance Act, 1994 as amended)

Any other charges billed to the customer such as processing charges, administrative fees, charges for providing extra accessories or providing other value added services such as a provision of driver etc. shall also be includible in the gross amount chargeable to Service Tax.

(Ministry’s F. No. B 43/7/97-TRU dt. 11.07.1997)

Exemption & Exclusion:

Service Tax will not be payable in cases where a bill has been raised on a Rent a Cab Scheme operator, by another rent-a-cab scheme operator who has sub-let the motor cab to the latter operator provided he pays Service Tax on the amount billed to his client for renting out the motor cab so obtained by him.

(Ministry’s F.No.B43/7/97-TRU dt.11.07.1997)

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