Reverse Charge - Renting of Motor Vehicle

[Kaustubh Karandikar]

RCM will be applicable / not applicable on renting of motor vehicle under these situations. 1) XYZ (Non – Body Corporate) taking on hire a vehicle from PQR where PQR is charging GST @ 5% to XYZ. This vehicle is further rented by XYZ to ABC (Body Corporate) where ABC will be required to pay GST under RCM. 2) XYZ (Non – Body Corporate) not registered with GST is renting his owned vehicle to ABC (Body Corporate) where ABC NOT required to pay GST under RCM. 3) XYZ (Non – Body Corporate) is renting the vehicle to ABC (Body Corporate) & charging GST @ 12% where ABC NOT required to pay GST under RCM. Experts views please.

AI Summary

Understanding Reverse Charge Mechanism for GST on Vehicle Rentals: When Body Corporates Must Pay A discussion on the applicability of the reverse charge mechanism (RCM) under GST for renting motor vehicles involves three scenarios. In the first, a non-body corporate, XYZ, hires a vehicle from PQR at 5% GST and rents it to ABC, a body corporate, which must pay GST under RCM. In the second, XYZ, unregistered with GST, rents a vehicle to ABC, where ABC is not required to pay GST under RCM. In the third, XYZ charges 12% GST when renting to ABC, and ABC is not required to pay GST under RCM. Participants seek expert opinions on these situations.