RCM on Renting of Vehicles Under GST


Renting of Motor Vehicle


Under RCM, the receiver of service is liable to pay tax on supply. Usually, the supplier of goods is liable to GST, but under RCM, the chargeability gets reversed.

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.

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.



From
CA Arihant Jain
9758815880










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