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ITC of purchased car for renting car

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Can a person other than body corporate who is providing renting service of motor vehicle to a body corporate claim ITC on motor vehicle purchased for such renting business.

if he opts for gst @ 5% under RCM
Replies (1)

As per GST regulations, a person other than a body corporate (e.g., an individual or partnership firm) providing renting services of motor vehicles to a body corporate can claim ITC (Input Tax Credit) on the motor vehicle purchased for such renting business, subject to certain conditions. However, if they opt for GST @ 5% under RCM (Reverse Charge Mechanism), the ITC claim might be restricted. Here's why: 1. _RCM applicability_: Under RCM, the recipient of the service (the body corporate) is liable to pay GST, and the supplier (the individual or partnership firm) is not required to pay GST. 2. _ITC restriction_: Since the supplier is not paying GST, they might not be eligible to claim ITC on the motor vehicle purchase. To claim ITC, the supplier should consider: 1. _Register under GST_: As a supplier, they should register under GST and obtain a GSTIN. 2. _Opt for forward charge_: Instead of RCM, they can opt for forward charge, where they pay GST on the rental income and claim ITC on the motor vehicle purchase. 3. _Comply with GST regulations_: Ensure compliance with all GST regulations and maintain proper documentation


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