RCM on renting of motor vehicle

[KARAN VERMA]

Sir, individual person (Unregistered) provide car on rent ₹ 10000 per month to company. Rent price not include fuel cost.

Whether company liable to pay RCM on rent charges. If yes what will be GST rate 5% or 18%.

[Mahir S]

Karanji,

The Government vide circular no. 354/189/2019-TRU dated 31.12 2019 has clarified the issue, wherein it has been stated that services provided by way of renting a motor vehicle has to be inclusive of cost of Fuel.

In your case, the fuel is not covered as consideration; therefore it shall not be covered under Reverse Charge Mechanism and no need for payment of GST.

However, to be on safer side, better to have a contract copy between the supplier of vehicle and your company or it should be clearly mentioned in the Invoice that only vehicle has been provided, exclusive of fuel charges..

[KARAN VERMA]

Thank you sir, in agreement we have mentioned that furl cost will be borne by company.

[Mahir S]

Welcome..

[Ganeshan Kalyani]

Sri Mahir S, we welcome you. You have come back after almost two years.

[Mahir S]

Absolutely correct Ganeshan ji. Thanks for the love n remembrance.. 🙏.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Mahir.

[KASTURI SETHI]

Dear Ganeshan Kalyani Ji,

Sh.Mahir S. Sir has come back after three years and five months (barring one reply dated 21.5.18) and not after two years. It is his second home coming. He is welcome back. I like his ideas which are off beat (unique) and hence can be called thought provoking and creative. Now all of will relish his views on GST.

[Mahir S]

Thanks so much Kasturi ji, for the warm welcome and kind words. I am blessed. 🙏.

We also learn a lot from your esteemed knowledge and appreciate your dedication and passion towards work.

[KASTURI SETHI]

I also support the views of Sh.Mahir S, Sir. His views are full of legal force. Nicely explained.

AI Summary

Reverse charge on motor vehicle rent depends on whether fuel is included in the taxable consideration; document exclusions clearly. Reverse charge on motor vehicle rent applies only when fuel is included in the taxable consideration; if the contract or invoice explicitly excludes fuel and the company bears fuel costs separately, the rent-only supply is not subject to reverse charge. Parties should record the allocation of fuel charges in the agreement or invoice to substantiate that fuel is outside the rent consideration.