Reverse Charge - Renting of Motor Vehicle

[Kaustubh Karandikar]

XYZ Ltd. Is hiring Bus (More than 13-seater capacity) for transporting the employees. The supplier of bus service is not charging GST being not registered with GST and is a proprietor. Is XYZ Ltd. liable to pay GST on it under reverse charge?

[Prudhvi Jakkula]

No. As the services are being received from unregistered person, the company is not required to pay tax under RCM. Reason for the same is, at present 9(4) is inoperative except for the services which are mentioned in the notification(In notification, goods and services related to real estate were mentioned which are in no way related to above query). Also 9(3) does not cover the above mentioned service.

So the company is not required to pay tax under rcm

[Ganeshan Kalyani]

The service provider other than company who is paying tax @5% provides a service of renting of motor vehicle to a company then the receiving company has to pay tax under reverse charge. In your query the provider of service is not registered. Hence reverse charge is not applicable.

AI Summary

Reverse charge on renting of motor vehicle: recipient not liable when the supplier is unregistered, notification scope controls.
Where a company receives bus-hire services from an unregistered proprietor, the recipient is not required to pay tax under the reverse charge mechanism because the recipient-liability provisions are inoperative except for services specified in notification, and the renting-of-motor-vehicle service in the query is not among those notified; by contrast, reverse charge may apply where a registered provider supplies motor-vehicle renting to a company and the service falls within notification-based recipient liability.