Renting of motor vehicles is covered under the Reverse Charge Mechanism (RCM) under GST. As per the provisions of the GST Act, the person who is renting the motor vehicle is liable to pay tax under RCM.
In the case of renting of motor vehicles, the supplier of the service is generally an unregistered person, and the recipient of the service is a registered person. The tax liability, in this case, is shifted from the supplier to the recipient of the service, and the recipient is required to pay the tax to the government under RCM.
Under RCM, the recipient of the service is required to pay the tax at the applicable rate on the value of the service, and the tax paid can be claimed as Input Tax Credit (ITC). The recipient of the service is required to comply with the provisions of the GST Act and should be registered under GST.
The rate of GST applicable on the renting of motor vehicles under RCM is 5% for vehicles that are designed to carry passengers with up to 12 seats and 18% for vehicles that are designed to carry more than 12 passengers.
It is important to note that the RCM provisions for renting of motor vehicles do not apply in certain cases, such as when the supplier of the service is a body corporate and the motor vehicle is used for personal use or when the service is provided to a non-taxable person.
In summary, the renting of motor vehicles is covered under RCM under GST, and the recipient of the service is liable to pay tax on the value of the service at the applicable rate. The tax paid can be claimed as ITC. The rates applicable under RCM for renting of motor vehicles are 5% for vehicles designed to carry passengers with up to 12 seats and 18% for vehicles designed to carry more than 12 passengers.
1. The RCM provisions on renting of motor vehicles apply to all types of motor vehicles, including cars, buses, and coaches.
2. The liability to pay tax under RCM arises at the time of payment or at the time of the booking of the motor vehicle, whichever is earlier.
3. The tax paid under RCM can be claimed as ITC by the recipient of the service and can be used to offset the tax liability on the output supplies.
4. The supplier of the service is not required to charge GST on the invoice, and the invoice should clearly state that the tax is payable under RCM.
5. The recipient of the service should ensure that the supplier of the service is an unregistered person. If the supplier is a registered person, the RCM provisions will not apply.
6. The recipient of the service should maintain proper records of the tax paid under RCM and the ITC claimed.
7. If the recipient of the service is an Input Service Distributor (ISD), he can distribute the tax paid under RCM to his other business locations as per the provisions of the GST Act.
8. The liability to pay tax under RCM on renting of motor vehicles applies to all types of business entities, including individuals, proprietorship firms, partnerships, companies, etc.
In summary, the RCM provisions on renting of motor vehicles under GST require the recipient of the service to pay tax on the value of the service at the applicable rate. The tax paid can be claimed as ITC, and the recipient of the service should maintain proper records of the tax paid and the ITC claimed. It is always advisable to seek professional advice to ensure compliance with GST laws and regulations.
The rate of GST applicable under RCM (Reverse Charge Mechanism) on renting of a motor vehicle under GST depends on the type of vehicle being rented. For vehicles designed to carry passengers with up to 12 seats, the rate of GST applicable is 5%, and for vehicles designed to carry more than 12 passengers, the rate of GST applicable is 18%. It is important to note that the liability to pay tax under RCM on renting of a motor vehicle under GST is shifted to the recipient of the service. The recipient can claim the tax paid as input tax credit, which can be used to offset the tax liability on the output supplies.
Here are some frequently asked questions (FAQs) related to RCM on renting of motor vehicle under GST:
A. RCM on renting of motor vehicle under GST is a tax mechanism that makes the recipient of the service liable to pay tax on the value of the service instead of the supplier. This applies to renting of all types of motor vehicles, including cars, buses, and coaches.
A. The recipient of the service is liable to pay tax under RCM on renting of motor vehicle under GST.
A. The rate of GST applicable under RCM on renting of motor vehicle under GST is 5% for vehicles designed to carry passengers with up to 12 seats and 18% for vehicles designed to carry more than 12 passengers.
A. No, the supplier of the service is not required to charge GST on the invoice for renting of motor vehicle. The liability to pay tax under RCM is shifted to the recipient of the service.
A. Yes, the tax paid under RCM on renting of motor vehicle can be claimed as ITC by the recipient of the service.
A. The recipient of the service should maintain proper records of the tax paid under RCM and the ITC claimed.
A. Yes, the RCM provisions for renting of motor vehicles do not apply in certain cases, such as when the supplier of the service is a body corporate and the motor vehicle is used for personal use or when the service is provided to a non-taxable person.
A. Yes, it is mandatory for the recipient of the service to be registered under GST for RCM on renting of motor vehicle.
Opportunity of hearing to before passing of order by GST Authority
Monthly GST revenues more than ₹1.4 lakh crore for 9 months in a row
Plight of Online Gaming Platforms – Assessment Under GST
