Reverse Charge - Renting of Motor Vehicle

[Kaustubh Karandikar]

XYZ (Proprietor) is supplying motor vehicle to PQR Ltd. for local travel but not charging GST in his invoice. It is not known to PQR whether the motor vehicle is owned by XYZ or he is taking on hire from a third person. It is also not known to PQR whether the third person is charging 5% GST to XYZ. Under the circumstances, whether PQR Ltd. Is liable to pay GST under reverse charge on the amount paid to XYZ?

[DR.MARIAPPAN GOVINDARAJAN]

In my view he is liable to tax under RCM

[KASTURI SETHI]

RCM is applicable only if condition mentioned against serial no.15 under column no.3 is fulfilled vide Notification no. 22/2019-CT(R) dated 30.9.19 otherwise FCM is applicable.

AI Summary

Reverse charge on renting of motor vehicle hinges on whether notification conditions for RCM are satisfied. Whether a recipient must pay tax under the Reverse Charge Mechanism for renting a motor vehicle supplied without GST depends on whether the transaction meets the specific notification conditions for reverse charge; if those conditions are met the recipient may be liable, otherwise the forward charge regime applies.