Applicability of Taxes on Taxi hiring

Dear Members,

I have a query on ST and VAT. We have hired a vendor for providing taxi services. It is purely on hire basis wherein the organization hires the taxis as per the requirements and clears the bills. There is no further committement. I would like to know the applicability of VAT, ST or both on such transactions.

Look forward to your responses.

Thanks and regards,

B V Soma Sastry

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2 Responses to Applicability of Taxes on Taxi hiring

  1. Raam Kumar says:

    Dear Mr. Sastry and Mr. Mittal,

    I am adding to this query post GST. With increased threshold to 20 lakhs many such agencies would not be registered under GST. In such a case, NGOs would have to pay these GST under Reverse charge mechanism. Is that right? Won’t it increase our compliance?

    Also, organisations engage consultants for short work and there cost does not have GST/ST element. Do such NGOs need to pay GST @ 18% for such consultants also.

    This would put a financial and compliance burden on all NGOs.

    Please deliberate.

    • Subhash Mittal says:

      I think Reverse Charge Mechanism between a registered entity and non-registered entity is applicable. In case the NGO is not registered on the ground that its income is exempt from GST, then reverse charge would also not be applicable. But if the NGO is registered under GST, then RCM would become applicable.

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