RCM Motorvehicles

[Madhavan iyengar]

In terms of notification dated 22/2019 CT regarding RCM on rentals of Motor vehicles in view of the provisions

a) the Individual/ Firm/LLP who are supplying the service to a body corporate can't charge 12% GST since the service is being supplied to a body Corporate who has to discharge GST on RCM @5%

b) However if individual// firm/LLP supplying the service to individual/firm/LLP they can continue to charge 12%

Expert views solicited

[Alkesh Jani]

Sir,

The definition of body corporate and company is given at Section 2(11) and 2(20) of Companies Act, 2013, which is as under :-

"(11) "body corporate" or "corporation" includes a company incorporated outside India, but does not include-

(i) a co-operative society registered under any law relating to co-operative societies; and

(ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf;

(20) "company" means a company incorporated under this Act or under any previous company law

Based on above, I am of the view that LLP/Firm, are incorporated under Limited liability Partnership Act,2008/ Indian Partnership Act,1932 and not under the Companies Act, 2013. Therefore, they are not within the ambit of term "Body corporate". Further, the "company" as per the explanation (i) of Section 137 of CGST Act, 2017, is for purpose of said section only.

Thanks

[KASTURI SETHI]

Reply to (b) above is YES. I agree with Sh.Alkesh Jani Ji.

[Madhavan iyengar]

Thanks for the detailed Clarification

Accordingly in case of (a) If a Individual / LLP/ Firm if they are supplying the service of renting of motor vehicles to a body corporate it will be covered under RCM only

[KASTURI SETHI]

Dear querist,

Reply to your query above is YES.

[HariKishan Bhonagiri]

Why don't we think Body corporate vs non body corporates. In Body corporate liability of owners restricted to the extent of contribution promised only.

Why don't we adopt the meaning for body corporate includes

Indian company

Foreign company

Indian corporations

Foreign corporations

LLP's

AI Summary

Clarification on GST for Vehicle Rentals: 5% RCM for Body Corporates, 12% for Individuals, Firms, LLPs. A discussion on the Goods and Services Tax (GST) implications for renting motor vehicles under reverse charge mechanism (RCM) was initiated. The query focused on whether individuals, firms, or LLPs supplying such services to a body corporate should charge 12% GST or if the body corporate should discharge GST at 5% under RCM. It was clarified that LLPs and firms, not being companies under the Companies Act, 2013, are not considered 'body corporates.' Therefore, when supplying services to a body corporate, the service falls under RCM. Experts agreed that services to individuals, firms, or LLPs can continue to charge 12% GST.