GST on Hiring of Commercial Vehicles

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183 Points Joined June 2017
A Private Company hires trucks for transportation of goods from a contractor on a monthly basis. The contractor is registered under GST and will charge GST @ 18%. Is the company liable to pay GST under RCM? Can the Company claim ITC for the 18% GST amount paid to the Contractor? Please provide the notification or section for the reference.
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On 20 September 2024 at 19:06 Report
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Master in Accounts & high court Advocate
8875 Points Joined December 2011

The company is not liable to pay GST under RCM (Reverse Charge Mechanism) in this scenario. The contractor is already registered under GST and will charge GST @ 18%, so the company is only required to pay the GST amount to the contractor. However, the company can claim ITC (Input Tax Credit) for the 18% GST amount paid to the contractor, provided they are also registered under GST and the goods transported are used for business purposes. Reference: - Section 2(17) of the CGST Act, 2017 defines "recipient of supply" as the person liable to pay consideration for the supply. - Section 2(93) of the CGST Act, 2017 defines "registered person" as a person who is registered under GST. - Section 9(3) of the CGST Act, 2017 states that the recipient of supply is liable to pay tax under RCM only if the supplier is not registered. - Section 16 of the CGST Act, 2017 allows a registered person to claim ITC on inward supplies. Notification: - Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, which notifies the GST rates for goods transport services..

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On 21 September 2024 at 16:06


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