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Gst paid on vehicle hired on monthly rental basis

AMAN KUMAR (ACCOUNTS OFFICER) (58 Points)

11 September 2017

IF we paid GST @ 5% on vehicle hired on the monthly rental basis (including diesel & driver salary) either RCM or a Registered vendor under normal process, Can we claim ITC on the GST paid on Vehicle Hired or not?

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18 Replies

Ravi Pandey (21 Points)
Replied 11 September 2017

yes we can claim ITC

AMAN KUMAR (ACCOUNTS OFFICER) (58 Points)
Replied 11 September 2017

Please clarify as per govt notification:-

“(i) Renting of motorcab where the cost of fuel is included in the consideration charged from the service recipient.
2.5
Provided that credit of input tax charged on goods and services used in supplying the service has not been taken
[Please refer to Explanation no. (iv)]

But is the meaning of this above notification whether the GST @ 5% No ITC or we can claim ITC pls guide.

CA Shashikumar PN (Consultant - Taxation) (264 Points)
Replied 11 September 2017

@ Aman kumar, If u are charging GST at 5% then you are not entitled to claim the ITC. However,

CA Shashikumar PN (Consultant - Taxation) (264 Points)
Replied 11 September 2017

if u Charge 12% gst then you can claim the ITC of inward supplies as per notification no.20/2017 Central Tax (Rate).

CA Shashikumar PN (Consultant - Taxation) (264 Points)
Replied 11 September 2017

The above provisions are from the point of view of suppliers and not from receiver point of view. If you are a receiver of motorcab services you can claim ITC irrespective of the rate charged i.e. 5 or 12% subject to section 17(5) of Cgst Act.

CA Shashikumar PN (Consultant - Taxation) (264 Points)
Replied 11 September 2017

The above provisions are from the point of view of suppliers and not from receiver point of view. If you are a receiver of motorcab services you can claim ITC irrespective of the rate charged i.e. 5 or 12% subject to section 17(5) of Cgst Act.

AMAN KUMAR (ACCOUNTS OFFICER) (58 Points)
Replied 11 September 2017

@ Shashikiran PN, Thanks for your reply, That Means As a receiver of the service, Some Service Provider of Rental Motor Car is not Registered and as a service receiver we have to pay GST under RCM @ 5% with NO ITC Claim as well as If service Provider claim GST @ 5% we have to pay the same and we will not claim GST @ 5% of GST Value which we have paid, IS it, right sir ?

CA Shashikumar PN (Consultant - Taxation) (264 Points)
Replied 11 September 2017

As per section 17(5)(b)(iii) ITC on rent a cab services is available only to a person who also provides the rent a cab services and for all others ITC on rent a cab is blocked.

Situation I: In your case assuming you are not in providing rent a cab services:
1) If u are procuring rent a cab services from an unregistered person then pay gst @ 5% and you can not claim ITC of the same in terms of section 17(5)(b)(iii).
2)If the rent a cab service provider charges you GST whether at 5% or 12%, you can't claim ITC as the same is blocked under section 17(5).

Situation II: In your case assuming you are in the business of providing rent a cab services:

then
1) If u are procuring rent a cab services from an unregistered person then pay gst @ 5% and you are eligible to take ITC.

2)If the rent a cab service provider charges you GST whether at 5% or 12%, you can claim ITC.

CA Shashikumar PN (Consultant - Taxation) (264 Points)
Replied 11 September 2017

As per section 17(5)(b)(iii) ITC on rent a cab services is available only to a person who also provides the rent a cab services and for all others ITC on rent a cab is blocked.

Situation I: In your case assuming you are not in providing rent a cab services:
1) If u are procuring rent a cab services from an unregistered person then pay gst @ 5% and you can not claim ITC of the same in terms of section 17(5)(b)(iii).
2)If the rent a cab service provider charges you GST whether at 5% or 12%, you can't claim ITC as the same is blocked under section 17(5).

Situation II: In your case assuming you are in the business of providing rent a cab services:

then
1) If u are procuring rent a cab services from an unregistered person then pay gst @ 5% and you are eligible to take ITC.

2)If the rent a cab service provider charges you GST whether at 5% or 12%, you can claim ITC.

Ravi Pandey (21 Points)
Replied 11 September 2017

sir kindly explain in simple language regarding rent a cab

AMAN KUMAR (ACCOUNTS OFFICER) (58 Points)
Replied 11 September 2017

Ok, means as a service receiver we will not claim the ITC on vehicle hired on Rental Basis, Where as Service provide the Vehicle on Rental Basis if they charge GST @ 5% they shall claim the FULL ITC, Is it Right?

Ravi Pandey (21 Points)
Replied 11 September 2017

thanks sir

Charan (Student CA IPC / IPCC) (24 Points)
Replied 16 January 2018

@ CA Shashikumar PN

Sir,

The rent a cab as referred in S.17(5) is different from transportation of passengers in the motor cab. So, on this basis -

1. Can a person (recipient) claim ITC if he avails Service from Ola...?? - As this is not rent a cab & is a Transportation of passengers in motor cab

2. Can a person (recipient) claim ITC if he avails Service from Zoom...?? - This definitely amounts to rent a cab, in my view (pl correct if I'm wrong)

3. Can a person (recipient) claim ITC if he avails Service from a contract (on a monthly rental basis - Bus/Cab) travels agency for giving transportation service to employees of a company...??

Pramud Barman (Nothing) (35 Points)
Replied 07 March 2018

18% or 5%

In case a contractor/ agency provides monthly hired vehicle services to a Company/Central PSU for a period of 2 years as per following bill details then what will be the GST Rate.

Please let me know whether it will be 18% or 5%

Sl. No.	Item Descripttion	Unit	Qty	Rate	Amount
1	Fixed Charge (upto 2000 KM)	Per Month	1	85,000.00	85,000.00
2	Running Charge	Per KM	100	10.00	1000.00
3	Night Halt	Per Night	22	500.00	11,000.00
4	Extra Hour	Per 1 Hour	117	50.00	5,850.00
5	Parking Fees	At Actual			1,820.00
6	Others (if any)	At Actual
				Total Rs.
Note: Fixed charge included driver salary, PF, ESIC, Insurance of the vehicle, Repairing & Maintenance of the vehicle etc except sl. 2, 3, 4 & 5 above

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