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

AI Summary

Bus Rental for Conductor is 'Renting of Motor Vehicle' Under GST; Exemptions Limited to Specific Entities, per HSN 996601. A client operating non-AC buses contracts them to a conductor for a fixed daily fee while covering expenses like road tax and maintenance, with the conductor responsible for costs such as diesel and tolls. The client seeks clarification on whether this arrangement is classified as 'Renting of Motor Vehicle' or 'Transportation of Passengers' under GST, and if it qualifies for any exemptions. A respondent clarifies it is 'Renting of Motor Vehicle' with no exemption, citing HSN 996601. Another respondent notes exemptions apply only if rented to state transport undertakings or educational institutions for transporting students and staff.