Reverse Charge - Renting of Motor Vehicle

[Kaustubh Karandikar]

As per the amended notification issued recently, 1) if a supplier charges 5% GST on renting of motor vehicle, the body corporate need to tell him not to charge since body corporate is required to pay under RCM? Or 2) the supplier can charge 5% but still body corporate need to pay under RCM? If the second situation is valid, will it not be double taxation since body corporate is not eligible to claim ITC on this service being under negative list?

[Alkesh Jani]

Sir,

Please refer Circular No. 130/2019 dated 31.12.2019.

Thanks

[Ganeshan Kalyani]

I agree with Sri Alkesh Ji.

[Spudarjunan S]

Dear Sir,

Kindly refer notification no.29/2019 C.T(R) dated 31.12.2019 which amends the notification no.22/2019 C.T(R) dated 30.09.2019 along with the clarification provided by the department vide circular no.130/2019 dated 31.12.2019 where it suggests your option 1) w.e.f. 01st October 2019.

[Ganeshan Kalyani]

I agree with Spudarjunan Ji's reply.

[NEERAJ KUMAR]

if service to body corporate then RCM applicable (means corporate will pay under rcm and supplier give invoice under rcm) and supplier will not charge the tax e.i, just give invoice with tick Invoice under RCM. if service to other than body corporate then supplier will charge 5 % and pay to govt.

AI Summary

Reverse charge: renting of motor vehicles requires recipient corporate to pay tax under RCM, supplier should not levy GST. Reverse charge applies to renting of motor vehicles when the recipient is a body corporate: the body corporate is liable to pay tax under RCM and the supplier should not charge the 5% GST, issuing an invoice marked 'Invoice under RCM.' If the recipient is not a body corporate, the supplier must charge and remit the 5% GST. The position is set out in amended notifications and departmental clarification.