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of <h1>Clarification on Reverse Charge Mechanism for Motor Vehicle Rentals: GST Rates, Input Tax Credit, and Supplier Conditions.</h1> The circular addresses the Reverse Charge Mechanism (RCM) for renting motor vehicles, where the supplier can opt to pay GST at either 5% with limited input tax credit (ITC) or 12% with full ITC. The GST Council recommended placing services under RCM when suppliers charge 5% GST to corporate entities, while those charging 12% GST can continue availing ITC. Amendments clarify that RCM applies if the supplier is not a body corporate, does not charge 12% GST, and supplies to a corporate entity. This clarification applies retroactively from October 1, 2019, to December 30, 2019.
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