TaxTMI 
TaxTMI 
XYZ (Proprietor) is providing bus service for transporting employees of PQR Ltd. (Body Corporate). XYZ (Proprietor) also supplying Motor Cars for the employees of PQR (Ltd.) for their official work of the company and not charging 12% (6% + 6%) GST in both the cases. Is under both the situations, PQR Ltd. (Body Corporate) is required to pay GST under reverse charge? If yes, whether once it is paid, PQR can claim ITC of the same?
GST under reverse charge
15 Mar 2023 
2 Replies 
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Reverse charge mechanism applies where corporates hire passenger vehicles with fuel included; recipient must pay GST, ITC limited.
Services of renting motor vehicles designed to carry passengers provided to a body corporate are taxable on the reverse charge mechanism where the supplier's consideration includes the cost of fuel, making the corporate recipient liable to pay GST. Input tax credit on rented buses has been held available in some advance rulings post-amendment, though contested, while input tax credit on rented motor cars is excluded and cannot be claimed. (AI Summary)
Services of renting motor vehicles designed to carry passengers provided to a body corporate are taxable on the reverse charge mechanism where the supplier's consideration includes the cost of fuel, making the corporate recipient liable to pay GST. Input tax credit on rented buses has been held available in some advance rulings post-amendment, though contested, while input tax credit on rented motor cars is excluded and cannot be claimed. (AI Summary)