Get 3 Yrs of CCI Pro Membership at Greater Value. Subscribe Now!

RCM Applicability on Car Rental for Passenger

926 views

Save Share

Pritam Mukherjee

64 Points Posted on 13 June 2023

I am a Sole Proprietor Travel Agent (Registered). I'm taking a car from Driver X (Unregistered) at 10000/- & proving it to Passenger (as Car Rental Service) Mr. Y (Unregistered) at Rs 12000/-.

Is it payble on RCM basis ?? RCM applicable to me as I am Sole Proprietor , not a Body Corporate ??

I am not clear about this ... Please help 🙏🙏

Replies (5)

Quick Summary

This discussion explores whether a sole proprietor travel agent needs to pay GST under Reverse Charge Mechanism (RCM) when renting a car from an unregistered driver to provide a car rental service to a passenger. The legal view suggests RCM applies if the supplier is not a body corporate, provides services to a body corporate, and doesn't charge 12% GST. However, in this specific case, the agent is not receiving services from a body corporate, thus RCM is not applicable. The agent also clarifies the GST rates for car rental services, noting the difference between 12% with full ITC and 5% with limited ITC.

CA Mohd Firoz Khan

Chartered Accountant

90 Points Posted on 15 June 2023

Legal View

RCM is applicable on renting motor vehicles used for carrying passengers if the supplier fulfils the three conditions below:

1) The supplier is other than a body corporate.
2) He provides the service to a body corporate.
3) The supplier does not charge 12% GST on the invoice from the service recipient.

Case View

1) Supplier (Mr X) is other than Body Corporate

2) He does not provide service to body corporate ( i.e Proprietor as Your Travel Agency)

Conclusion :

As per Legal Requirement for RCM Applicability, Firstly you are not falling under Second condition so you do not require to pay GST under RCM as taken Car from driver X. Secondly you need to charge 12 % on invoice for providing Service to Y.