notification no 22 CT rate 30/09/2019 RCM on Motor vehicles

[Madhavan iyengar]

If Motor vehicle is rented by a unregistered person ( individual/ firm) to a body corporate then body corporate has to discharge GST @5%

If Motor vehicle is rented by a GST Regd person ( indvidual/ firm) to a body corporate then body corporate has to discharge GST @5%

IF Motor vehicle is rented by a GST Regd person body Corporate to another body corporate then following to be checked on applicability of RCM

a) IF Body Corporate who is providing service and he avails credit of input services in same line of business and charges 5% GST on forward charge then no RCM

b) IF Body Corpoarte who is providing service and he does not avail credit of input services in same line of business then RCM will apply to the receipient body corporate

Experts kindly give your views on the above

[KASTURI SETHI]

No RCM is applicable if service provider is a body corporate. W.r.t. (b) above.

AI Summary

Reverse charge mechanism on motor vehicle rentals: recipient liability depends on supplier's input tax credit availment. Where motor vehicles are rented to a body corporate, the recipient body corporate must discharge GST when the supplier is unregistered or a registered individual/firm. If the supplier is a GST-registered body corporate, RCM is excluded when the supplier avails input tax credit in the same line of business and charges GST on the supply; if the supplier does not avail such credit, RCM applies to the recipient. An expert response states that no RCM applies when the supplier is a body corporate.