Rate of GST on the Cab Operator (Servcie Provider) is 5% if he has not availed/is not availing Input Tax Credit on Inward Supplies received by him for providing outward supplies. If he avails ITC of GST on receipt of supplies, he shall charge GST @ 12%. In any case the GST is a forward charge & there is no requirement to pay GST on RCM.
As far as Receiver of such services is concerned whether he can take Input Tax Credit is important. As per Section 17(5)(b)(iii) ITC is not available in respect of Rent-a-Cab. The question is whether many register dealers who make Contract Transportation arrangement for their employees to commute between their place of residence to place & back. It may be a motor car, taxe, car, minibus, cab or bus (may be called by different names), ITC is available or not. Generally Such vehiles are hired on Contract basis and ply between fixed routes and sotp at pre-fixed places.
Cab is nit defined under GST Law, but Section 2(22) of the Motor Vehicles Act, 1988 defines “Maxicab” as any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward; Section 2(25) of the Motor Vehicles Act, 1988 defines “Motorcab” as any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward; Section 2(26) of the Motor Vehicles Act, 1988 defines “Motor Car” means any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor, motor cycle or invalid carriage; and Section 2(29) of the Motor Vehicles Act, 1988 defines “Omnibus” means any motor vehicle constructed or adapted to carry more than six persons excluding the driver;
Since Cab is not defined in GST Law, and for meaning of Motor Vehicles, referrence is made to The Motor Vehicles Act, 1988, in my opinion we can take the meaning of Cab & COntract Carriage from The Motor Vehicle Act, 1988. Since there is no restriction on taking ITC of GST in respect of Contract Carriage which is defined as below, ITC is available in my opinion, for hiring minibus, bus, etc. for transportation of employees for business purpose (In relation to or in the course of furtherance of business of the registered dealer who receives such services). I ma also of the opinion that a COntract Carriage is different from hiring a cab, which may be casual in nature. Contract carriage, in my view pre-supposes a long-term arrangement for transportation and not a one time engagement of a taxi or a cab, where in the routes & stops depend up on the requirement of any particular travel, which is not so in the case of contract carriage arrangement for transportation of employees.
As per Section 2(7) “Contract Carriage” means a motor vehicle which carries a passenger or passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum—
- on a time basis, whether or not with reference to any route or distance; or
- from one point to another,
- and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes:-
- a maxicab; and
- a motor cab notwithstanding that separate fares are charged for its passenge
Sreepada H.R. M Com, ACMA, Practicing Cost Accountant.
(M) 9945881990
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