Reverse Charge - Renting of Motor Vehicle

[Kaustubh Karandikar]

GST under reverse charge on renting of motor vehicle will be applicable only when, those services are received by Body Corporate from a person, who procures such services from third party, who is in same line of business and therefore, avails ITC of tax charged by third party and then charges 5% GST.

In short, 1) Third Party providing renting service to a person will charge 5% (2.5% + 2.5%) GST which the person will claim ITC. 2) The person in turn while providing renting of motor vehicle service to Body corporate will not charge GST 2) Body Corporate to pay 5% GST under reverse charge on the invoice issued by the person but cannot claim ITC. 3) if the person is having his own vehicle and providing the renting service, he will charge applicable GST to Body Corporate and if the person is not registered with GST he will not charge but the Body Corporate in that situation is not required to pay GST under reverse charge.

Respected Experts, awaiting your response on my views

AI Summary

Clarification on GST Reverse Charge: 5% GST Applies to Body Corporates Renting Vehicles, No ITC Claim Allowed. A query was raised regarding the applicability of Goods and Services Tax (GST) under reverse charge for renting motor vehicles. It was clarified that GST at 5% applies when services are received by a body corporate from a person who procures such services from a third party in the same business line, claiming Input Tax Credit (ITC). The body corporate must pay GST under reverse charge but cannot claim ITC. If the service provider uses their own vehicle, they charge applicable GST. A response highlighted that reverse charge applies regardless of whether the service is provided through owned or third-party vehicles, with no GST under reverse charge from unregistered suppliers.