GST Rate on Rent a Car Business
This query is : Resolved
20 January 2026
A person having rent a car business. Customer takes car on rent on daily basis, customer itself fills fuels & customer itself drives a car. It’s a self driven car. Is this service chargeable to GST 18% with ITC only or supplier has option to pay GST 5% without ITC ?
27 January 2026
The option to pay 5% GST without ITC is generally restricted to "Renting of motor vehicles designed to carry passengers where the cost of fuel is included in the consideration."
In your case, since the customer fills the fuel, you do not meet the primary condition for the concessional 5% rate. Therefore:
Applicable Rate: 18% GST (SAC 997329).
Input Tax Credit (ITC): You are eligible to claim Full ITC on your business expenses, including the purchase of the cars (if used for further supply of rental services), maintenance, and other input services.
In your case, since the customer fills the fuel, you do not meet the primary condition for the concessional 5% rate. Therefore:
Applicable Rate: 18% GST (SAC 997329).
Input Tax Credit (ITC): You are eligible to claim Full ITC on your business expenses, including the purchase of the cars (if used for further supply of rental services), maintenance, and other input services.
Message likes :
1 times
27 January 2026
Usually, GST on motor vehicles is "blocked" under Section 17(5) of the CGST Act. However, there is a specific exception for businesses like yours:
ITC is available if the motor vehicle is used for further supply of such vehicles (i.e., renting them out).
This means you can claim the GST paid when you buy the cars for your rental fleet, which significantly reduces your net tax liability.
ITC is available if the motor vehicle is used for further supply of such vehicles (i.e., renting them out).
This means you can claim the GST paid when you buy the cars for your rental fleet, which significantly reduces your net tax liability.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- Stamp Paper for partnership firm change new income tax 2025
- Capital gain from sale of house property
- TDS on Purchase of Immovable Property by NRI from NRI
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- Value of property in capital gain
- When TDS on GST applied
- Before GSTAT- APL-02 Vs APL-04
- Annual return in Gst
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
