COMPOSITION SCHEME

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This discussion clarifies GST implications for car hire services provided by composition dealers. It explains that if a supplier is registered and car hire isn't a specifically notified service for RCM, the recipient generally doesn't pay tax under the Reverse Charge Mechanism (RCM). However, RCM may apply to car rental services (excluding body corporates) if the supplier doesn't charge 12% GST and the recipient is a body corporate, as per Notification No. 29/2019-CT (R).

CMA Sagar Das

CMA Sagar Das (Querist)
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18 April 2020 Composition Dealer providing Car Hire Services. Whether service recipient has to pay pay tax under Reverse Charge Mechanism (RCM)?

RAJA P M

RAJA P M (Expert)
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18 April 2020 If Taxpayer make supply as rcm then he can't opt composition scheme...

Vikas Tapariya

Vikas Tapariya (Expert)
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19 April 2020 As per Sec 9(4) of CGST Act, if a registered person purchases goods/services from an unregistered dealer (URD) then the registered taxpayer is liable to pay GST on reverse charge basis but some goods/service notified by central government after recommendation by GST council fall in RCM but car hire service not fall in that notified services. So if the supplier is registered then RCM is not applicable in above case.

CA ANILKUMAR B.COM FCA DISA

CA ANILKUMAR B.COM FCA DISA (Expert)
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19 April 2020 Notification No. 29/2019-CT (R) dated 31.12.19 state that RCM shall be applicable on the service by way of renting of any motor vehicle designed to carry passengers
where the cost of fuel is included in the consideration charged from the service recipient only if the supplier fulfils all the following conditions:–

(a) is other than a body-corporate;
(b) does not issue an invoice charging GST @12% (6% CGST + 6% SGST) from the service recipient; and
(c) supplies the service to a body corporate.

If the above conditions are cumulatively satisfied RCM will be applicable to the recipient of service.

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