GST treatment where the Buses are given on contract but all the running costs are borne by the owner

[Guest]

Dear Sir

One of our client is in the business running the Non AC buses. he had given the buses on contract to conductor for fixed daily amount. The client bears the costs like Road tax, Repair and Maintenance of buses, Permit Fee, Office Expenses etc. but the cost of Diesel, Toll tax, Adda Fee and salary to driver is being paid by the conductor. The client do not get the diesel bills from conductor as the diesel cost is being borne by conductor himself. The conductor get the bus in the morning from the place fixed by the owner of bus and park the bus at the same place in the evening and pay the fixed amount on daily basis.

Issues :-

1- Whether the service provided by our client will be classified as 'Renting of Motor Vehicle' or 'Transportation of Passengers'

2- Whether the service provided by client is exempted under GST.

3- If taxable the at what rate.

Regards

Prince Sharma

Mb. 8054122345

[KASTURI SETHI]

It is renting of motor vehicle. No exemption is available. HSN 996601.

[Guest]

Thank Sir.

[Shilpi Jain]

It cannot be transport of passengers since the bus is given on rent. Exemption is available if the bus is given on rent to a State transport undertaking aur to a person who provides transportation of students faculty and staff to an educational Institution

AI Summary

Renting of motor vehicles: supplying buses on contract is hire, not passenger transport; limited exemptions apply. Where buses are given to a conductor for a fixed daily payment while the owner bears major running costs but the conductor bears fuel, tolls and driver wages, the supply is renting of motor vehicle, not transportation of passengers. No general GST exemption applies; exemption is limited to leases to a State transport undertaking or leases for transportation of students, faculty or staff to an educational institution. The discussion notes the applicable HSN classification for the activity.