Are we eligibile to take input of GST paid under RCM on hiring of bus (having capicity 45 passenger)

[Tikam Gupta]

Dear Sir,

We hire buses form non body corporate for our customers. We are paying 5% GST under RCM on hire charges according to the latest notification.

My query is can we we take input benefit of this GST amount. Because section 17 (5) of CGST Act, 2017, restrict to take credit only 'renting or hiring of motor vehicle having approved seating capacity up to 13 persons (including driver).

Please advice.

[Venkataprasad Pasupuleti]

If seating capacity of bus >13 & paying GST @12/18% on output, you are eligible for ITC.

[KASTURI SETHI]

As mentioned by you seating capacity of hired bus is more than 13 persons, so there is no restriction on availment of ITC under Section 17(5) of CGST Act. You are paying GST @ 5 % under RCM. It implies that your supplier is non-body corporate and he will not charge GST from you. That person will just mention on the invoice that GST is to be paid by the service receiver under RCM. Latest notifications no.22/19-CT(R) dated 30.9.19 and 29/19-CT(R) dated 31.12.19 read with Board's Circular no.130/49/2019 dated 31.12.19 do not put any restriction on availment of ITC. Restriction is imposed only on those hired vehicle which have seating capacity up to 13 persons under Section 17(5) of CGST Act.

Read above notifications with Board's circular conjointly.

Motor vehicle - Reverse Charge Mechanism (RCM) on renting of motor vehicle

Circular No. 130/49/2019-GST, dated 31-12-2019

AI Summary

Input tax credit on RCM for hiring buses with seating above threshold is allowable when used in taxable supplies. When a hired bus from a non-corporate supplier has seating capacity greater than thirteen passengers, the restriction in Section 17(5) of the CGST Act on claiming input tax credit for renting or hiring of motor vehicles does not apply; consequently, where the recipient uses the bus in taxable supplies and accounts for tax under the reverse charge mechanism in accordance with the relevant notifications and Board circular, the recipient may avail credit of GST paid under RCM.