Taxpayer is having a rent a car business. He gives car to customers. Car is driven by customer & customer only fill the fuel. Taxpayer gets the daily rent amount. In this service, taxpayer has option to pay GST @ 5% without ITC ? Or taxpayer has to pay 18% GST with ITC & no GST @ 5% without ITC ? Or is it better he opt composition @ 6% ?
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GST on rent a car Business , GST Query
Replies (1)
For rent-a-cab where the car is self-driven by the customer and fuel is paid by the customer, the correct classification is “renting of motor vehicle designed to carry passengers”.
The taxpayer may choose either:
-
GST @ 5% (2.5% CGST + 2.5% SGST) without ITC, or
-
GST @ 12% (6% + 6%) with ITC.
Composition @ 6% is NOT allowed for this service.
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