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Applicability of reverse charge mechanism

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Garimella umabala

22 Points Posted on 16 April 2020

Applicability of reverse charge mechanism on rent a car, staff bus, rules

Replies (2)

Quick Summary

This discussion clarifies the applicability of the reverse charge mechanism (RCM) on renting motor vehicles, specifically car and staff bus services. RCM applies when the service provider is not a body corporate, does not charge GST at 12%, and the service recipient is a body corporate. If the supplier opts for the 12% GST rate, RCM is not applicable, and the recipient can claim Input Tax Credit (ITC).

Pankaj Rawat

GST Practitioner

29904 Points Posted on 16 April 2020

As per Notification 22/2019 CT (R) ;
RCM is applicable on Renting of motor when the Supplier of service is not an body corporate & have opted to pay GST on FC @ 5% without ITC & the Recepeint of Services is an Body corporate .
And if Supplier has opted to pay GST @ 12% then no rcm is applicable , intact Receptient can claim ITC for the same.

(for details can refer Circular 130/49/2019 GST)

Baskar

CMA

92 Points Posted on 17 April 2020

Hello,

To bring in greater clarity, serial No. 15 of the notification No. 13/2017-CT (R) dated 28.6.19 has been amended vide notification No. 29/2019-CT (R) dated 31.12.19 to 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

To Conclude:

Service Provider is Corporate Entity-No RCM

Service Recipient is Other Than Corporate Entity-No RCM

Hope Your Doubt will clear now..