Rent a cab operator

[Guest]

Dear Sir,

As the GST rates are 5% and 12% with ITC,

Now we had finally decided to go with 5% without ITC ( as the ITC is not allowed to Service receiver), request you to kindly advise on the below points.

1. As a service provider can we charge Both the slabs to our clients ( 5% for some clients and 12% for some clients).

2. some of our clients are insisting for 12% and some are insisting for 5%.

Please help in this regard.

Srinee

[KASTURI SETHI]

In my view, hybrid procedure can create problem practically.

[Rajagopalan Ranganathan]

Sir,

GST @ 5% without ITC means the service provider cannot avail ITC in respect of inputs and input services used for providing the output service (Renting of motor cab). If he pays 12% gst then he can avail ITC in respect avail ITC of inputs and input services used for providing the output service (Renting of motor cab). AT whatever rate the service provider pays gst the same can be availed by the service receiver if he uses the motor cab in the course of or furtherance of business. If the client uses the motor cab for his personal use then he is eligible to avail ITC.

As per Section 17 (5) (a) of CGST Act, 2017-

Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-

(a) motor vehicles and other conveyances except when they are used––

(i) for making the following taxable supplies, namely:-

(A) further supply of such vehicles or conveyances ; or

(B) transportation of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances;

(ii) for transportation of goods.

[Nash Industries I Pvt Ltd]

it is to be declared before hand and no change is allowed mid year. It is advisable to avail credit and pay the full rate of tax. Rent a cab - negative list for credit

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Rajagopalan.

[Chhatra Jain]

I may further add that if fuel cost ils borne by service récipient in that case supplier has to charge 18% GST

Am I right sir ?

AI Summary

GST rate choice for motor cab rentals determines input tax credit availability and requires prior declaration by the supplier. Choice of GST rate for renting motor cabs entails whether the supplier elects 5% without input tax credit (precluding ITC on inputs and input services) or pays a higher rate with ITC recovery. A hybrid application across clients is practicability-challenging and the supplier is advised to declare the tax treatment in advance without mid-year changes. Restriction on input tax credit for motor vehicles applies except for passenger transportation or further supply, and service receiver ITC entitlement depends on business use; fuel costs borne by recipient may alter applicable GST treatment.