INCOME FROM RENT COLLECTION OF TIPPER

[Renju Joy]

A contractor registered under GST also having hire collection from one Tipper truck. What is the GST Liability on his collection from Tipper?

[KASTURI SETHI]

18% Chapter/Heading No. 9973 .

[CA HemanthKumar]

There is some confusion created due to change in service classification and the rate of tax would be as follows

SAC	Description of service	Rate of tax
9973 -(Leasing or rental services without operator)	(iii) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.	Same rate of central tax as on supply of like goods involving transfer of title in goods
9966 (Rental services of transport vehicles [with operators]	[(iii) Rental services of transport vehicles with [***]56 operators, other than (i) and (ii) above.	18%

Regards

CA Hemanth Kumar

[KASTURI SETHI]

Here rate of supply of the same goods is applicable which is 18 % mentioned against 9973.

[Renju Joy]

Under Heading 9965

Services by way of transportation of goods-

(a) by road except the services of-

(i) a goods transportation agency;

(ii) a courier agency;

(b) by inland waterways. shall be treated as NIL rated. Kindly clarify.

[KASTURI SETHI]

9965 is not applicable here. This service falls under erstwhile "Right to use of tangible goods". Now under GST this service falls under 9973 and no exemption is available.

[Renju Joy]

Heading 9965 is Notified vide Notification No. 12/2017- Central Tax (Rate) which states that service by way of transportation of goods is a NIL rated supply. Kindly clarify.

[KASTURI SETHI]

See Notification No.20/19-CT(R) dated 30.9.19 (Serial No.h) amending original notification no.11/17-CT(R) dated 28.6.17 (serial no.viia and viii). Leasing or renting of goods. Tipper has been treated as goods. Whether you go for (viia) or (viii) rate of GST is 18% in both ways. In my view, here supply is covered under (viia). No question of nil rate arises.

[CA HemanthKumar]

Yes, said exemption entry is for transportation of goods. In case if your services falls under the said category i.e. you have agreed to provide transport services i.e. picking and delivery services instead of renting of truck on monthly basis , exemption can be applied.

[KASTURI SETHI]

Exemption is available if hired to GTA. Serial No.22 of Notification No.12/17-CT(R) refers.

AI Summary

Leasing of vehicles: GST applies where hire is a right-to-use supply, not the nil-rated transport service.
GST on tipper hire turns on classification: hire of a tipper without operator constitutes leasing or renting of goods (right-to-use) and is subject to the standard GST rate; the nil-rated exemption for transportation applies only where the supply is a carriage service or where specific exemption conditions, such as hiring to a goods transport agency, are met.