GST Reverse Charge Mechanism on renting of Motor Vehicle


GST Reverse Charge Mechanism on renting of Motor Vehicle:

Vide Notification No. 22/2019- CG (rate), dated 30-9-2019, GST on reverse charge basis has been made applicable on specified service receiver from 1-10-2019 as under:

Notification No. 22/2019- Central Tax (Rate) dated the 30th September, 2019:

Sl. No. Nature of Service Service Provider Service Receiver
15 Services provided by way of renting of a motor vehicle provided to a body corporate. Any person other than a body corporate, paying central tax at the rate of 2.5% on renting of motor vehicles with input tax credit only of input service in the same line of business Any body corporate located in the taxable territory.

 

Please note that if someone has opted for GST Rate of 5% in case of renting of passenger vehicle (along with operator and fuel) [2.5% CGST + 2.5% SGST] then he cannot take Input Tax of GST.

Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017

Sl. No. Chapter Section or Heading Description of Service Rate (per cent) Condition
10 Heading 9966 Rental services of transport vehicles with operators (i) Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business (i.e., service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle) has not been taken [Please refer to Explanation No. (iv)]
OR
6
(iii) Rental services of transport vehicles with operators, other than (i) above. 9

Some of the Situations explained by reading of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 along with Notification No. 22/2019- Central Tax (Rate) dated the 30th September, 2019:

Transaction If Reverse Charge Applicable?
Bus/Car/Dumper/tipper/tractor/loading rickshaw, etc, motor vehicle without operator or without fuel or without both – Rate 18% No
Bus/Car, etc, passenger motor vehicle with operator and with fuel and provider opted for 12% GST with ITC – Rate 12% No
Dumper/tipper/tractor, etc, transport motor vehicle with operator and with fuel – Rate 18% No
Service provider is unregistered No
Service provider is body corporate No
Service provider and service receiver both are non-body corporate No
Service receiver is non-body corporate and service receiver is body corporate outside taxable territory No
Bus/Car, etc, passenger motor vehicle with operator and with fuel and provider opted for 5% GST without ITC except of input service in the same line of business – Rate 5% Yes

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