GST under RCM

[Ethirajan Parthasarathy]

Tax liability under RCM for both GTA and renting of motor vehicle for transport of passenger are provided vide entry 1 and 15 respectively of notification 13 of 2017 CGST Rate.

Only for these two entries, additional Condition are prescribed viz.

“Who has not paid Central tax at the rate of 6%” (for GTA) and

“Who does not issue an invoice charging Central tax at 6%” (for passenger Transport)

Query 1

It is not clear why the conditions for GTA and for passenger vehicles are differently worded.

Query 2

It is also not clear why the condition is included in column 2 for GTA and column 3 for passenger vehicles.

The very notification 13 is for listing out services which are brought under RCM.

As an exception, for above two services option for charging GST under forward charge also provided.(2.5% without ITC and 6% with ITC).

Plain reading of the above gives a meaning that RCM tax is attracted if the supplier either charges 5% (Under one of the forward charge option available to him) or does not charge at all because he is not liable to be registered.

Query 3

To sum up whether RCM tax is attracted even if the supplier charges 5% on forward charge option.

A supplier who pays 2.5% Central tax will fit into the phrase “who has not paid Central tax at 6% for GTA and pays nothing because he is unregistered.

Query 4

But whether the phrase “who does not issue invoice” found in the entry for transport of passengers will cover unregistered person who may not issue any invoice at all.

[SUSHILKUMAR GOYAL]

Entry 15 has been substituted by Notification No. 29/2019- Central Tax (Rate), Dated 31-12-2019. After its substitution, reverse charge will be applicable where services are provided by way of renting of any motor vehicle designed to carry passengers and the cost of fuel is included in the consideration charged from the service recipient, if such service is provided to a body corporate by a person, other than a body corporate and does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipient.

[PAWAN KUMAR]

Dear sir please read circular no. 134 in this regard.

AI Summary

Reverse charge mechanism for GTA and passenger vehicle renting hinges on supplier invoice issuance and tax-charging conduct. Reverse charge for GTA services and renting of passenger motor vehicles is conditioned on supplier conduct: GTA entry refers to a person 'who has not paid Central tax at the rate of 6%', while the renting entry refers to a person 'who does not issue an invoice charging Central tax at 6%'; Notification No.29/2019 substituted entry 15 to apply reverse charge where passenger vehicle renting (with fuel included) is supplied to a body corporate by a non-corporate who does not issue such an invoice.