As per the GST Notification no.22/2019 dtd.30th Sep,2019, RENTING OF MOTOR VEHICLE has been brought under RCM bracket. The definition of 'Motor Vehicle' under Motor Vehicles Act covers almost all motorised vehicles ,except a few. In this regard kindly confirm the following;
1. Whether hiring of vehicles for TRANSPORTATION OF EMPLOYEES by a company on a regular basis , will attract RCM? (fuel cost included in contract,ITC is not availed by the supplier, The contract nomenclature is ' Hiring of Buses/Cars for a period of 3 years')
2. What if the fuel cost is NOT included in contract, in the above example.
3. Is there any separate treatment applicable for CASUAL hiring contract ( hiring on need basis)
There is lot many confusion exist in the industry with respect to above inclusion . Kindly throw some light on this pls.
GST on Renting Vehicles for Employee Transport: 5% Under RCM for Non-Corporate Rentals Post-October 2019. Fuel Costs Irrelevant. A discussion on the Goods and Services Tax (GST) implications for renting motor vehicles under the Reverse Charge Mechanism (RCM) was initiated, focusing on whether hiring vehicles for employee transportation attracts RCM. It was clarified that companies receiving vehicle rental services from non-corporate entities must pay GST at 5% under RCM. The inclusion of fuel costs in contracts does not affect this obligation. Casual hiring contracts receive no separate treatment. RCM applies to services invoiced after October 1, 2019, regardless of when the service was performed. For corporate bodies providing cab services to employees, Forward Charge Mechanism applies. The service provider must adhere to the time of supply rules, and only the service receiver pays 5% under RCM, with the provider issuing a bill of supply. (AI Summary)
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