RCM Applicability on Car Rental for Passenger

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. 

There are two GST rates used in renting motor vehicles:

With full ITC- 12%

With limited* ITC- 5%

*Limited ITC means input tax credit can be claimed only from the output liability in the same business line.

Welcome,

Best Regards,

CA Mohd Firoz Khan

Ca.mfkhan @ gmail.com