Notification No. 29/2019-CT (Rate) dated 31.12.2019 and Circular No. 130/49/2019-GST dated 31.12.2019

Suppliers of service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient have an option to pay GST either at 5% with limited ITC (of input services in the same line of business) or 12% with full ITC.

Supply when provided by suppliers paying GST @ 5% to corporate entities was placed under RCM w.e.f 01.10.2019.

Entry 15 of the notification No. 13/2017-CT (R) dated 28.6.2017 prior to amendment–

(1) (2) (3) (4)
“15 Services provided by way of renting of a motor vehicle provided to a body corporate. Any person other than a body corporate, paying central tax at the rate of 2.5% on renting of motor
vehicles with input tax credit only of input service in the same line of business
Any body corporate located in the taxable territory.

Entry 15 of the notification No. 13/2017-CT (R) dated 28.6.2017 after amendment–

(1) (2) (3) (4)
“15 Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate. Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipient Any body corporate located in the taxable
territory.”.

Clarificatory amendment applicable w.e.f 01.10.2019

Thus, RCM shall be applicable on the service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient only if the supplier fullfils all the following conditions:–

  • is other than a body-corporate;
  • does not issue an invoice charging GST @12% from the service recipient; and
  • supplies the service to a body corporate.

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