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

Reverse charge on motor vehicle rentals: supplies to body corporate attract RCM, others may be charged standard GST by supplier.
Reverse Charge applies to motor vehicle rental services supplied to a body corporate, shifting GST liability to the recipient; suppliers (individuals, firms, LLPs) must not charge tax in such cases. Supplies to non-body corporate recipients may be taxed normally by the supplier. LLPs and partnership firms are not treated as body corporates under company law, and company-specific statutory explanations are confined to their sections.