RCM on renting of vehicle to body corporate

[SUSHANTA MISHRA]

As per Notification No. 22/2019- Central Tax (Rate) Dated 30th Sept 2019 , renting of vehicle by a person other than body corporate to a body corporate is covered under RCM U/s 9(3) of CGST Act w.e.f 1st October 2019. But it is not clear from the circular about the status of service provider (i.e registered or un-registered or both)

Query is :

1) Renting of vehicle by registered person to body corporate is taxable in the hands of body corporate under RCM U/s 9(3) or

2) Renting of vehicle by un-registered person to body corporate is taxable in the hands of body corporate under RCM U/s 9(3) or

3) Both

Regards,

[KASTURI SETHI]

Answer is both.

[Atul Rathod]

Only from registered person as it says the service provider must be the one who is PAYING at the rate of 2.5%. Therefore supplier must be the registered person.

[KASTURI SETHI]

Yes. Sh.Atul Rathod is right. I agree with him.

[SUSHANTA MISHRA]

Renting of motor vehicle by all registered person (other than by body corporate) is not covered under RCM. Please read status of service provider, they should be registered as well as should fulfill some additional conditions, then only renting of vehicle by them will be taxable under RCM in the hands of body corporate

[Atul Rathod]

Your question was very limited, therefore we restricted our answer to the registered person or unregistered person. I believe that you have gone through the notification in detail where additional condition is mentioned for status of supplier of service and wordings has been added to renting of motor vehicle.

[VaibhavKumar Jain]

Since the Notification refers Section 9(3), it may cover both registered and un-registered service providers (other than body corporate). However RCM shall not be applicable, where the service provider (other than body corporate) charges GST other than @5%.

Regards,

[KASTURI SETHI]

"where the service provider (other than body corporate) charges GST other than @5%".

You intend to say "more than @5%" . It means 5% is the maximum limit. No minimum limit. Or you want to say "Other than @5%". Pl. clear the doubt. Thanks & regards.

[DR.MARIAPPAN GOVINDARAJAN]

Section 9(3) of the Act provides that the Government may specify category of supply of goods or services or both, the tax on which shall be paid on reverse charges basis. Under Notification No. 22/2019-Central Tax (Rate), dated 30.09.2019 the Government specified the supply - renting of vehicle by a person other than body corporate is covered under reverse charge. Therefore the status of the supplier, whether registered or unregistered is not looked into. The receiver as stipulated in the Notification is liable under reverse charge.

[KASTURI SETHI]

DR.MARIAPPAN GOVINDARAJAN JI,

Sir, Thanks a lot for clearing the air. My doubt stands cleared with your reply.

Regards,

K.L.SETHI

[Shyam Naik]

The Service provider is specified in the notification, ie . 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.

It would mean that the service provider should have opted for payment of taxes @5%.

Accordingly, service provided by unregistered person shall not be covered under RCM, as s/he is not paying central tax @ 2.5%.

AI Summary

Debate on GST Reverse Charge Mechanism for Vehicle Rentals: Does it Apply to Registered or Unregistered Providers? A discussion on the Goods and Services Tax (GST) focused on the reverse charge mechanism (RCM) for vehicle rentals to body corporates, as per Notification No. 22/2019-Central Tax (Rate). The main query was whether RCM applies when the service provider is registered, unregistered, or both. Opinions varied: some participants argued both registered and unregistered providers are covered, while others emphasized that only registered providers charging GST at 5% qualify. The consensus leaned towards registered providers being subject to RCM, provided they meet specific conditions, including charging the appropriate GST rate.