Hiring of Goods Vehicle to GTA

[Deepak D]

My Client has provided vehicles for the Goods Transportation not entered into any agreement with GTA. Vehicle are given him on Fixed KM basis. Further the Cost of Fuel and Driver Salary is paid by my Client.

Is it considered as Hiring of Vehicles as the Cost of Fuel is included?

Whether the Vehicle Hiring provided to GTA is exempt from GST

[Sadanand Bulbule]

Plz refer Sl No.10 of the Notification No.11/2017-Central Tax[Rate] dated 28/06/2017. It defines the taxable event of rental services of vehicles for all purposes with different rate of tax covered by SAC 9966 and co-relate your facts thereto. Agreement or otherwise is immaterial for such purpose.

[Sadanand Bulbule]

Dear Sir

However in terms of Sl No.22[b] of Notification No.12/2017-Central Tax [Rate] dated 28/06/2017, the services of hiring of vehicles to GTA for transportation of goods, covered by SAC 9966 OR 9973, are exempt from tax. Nevertheless, the necessity of agreement for such services is the choice of the concerned parties. But the services of GTA continue to be taxable.

[Sadanand Bulbule]

I furtherance of the above subject, it is worth to note the following AAAR on rental services of vehicles to schools:

2025 (7) TMI 52 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU - In Re: Tvl. Batcha Noorjahan (M/s. School Transport)

 

[KASTURI SETHI]

Q. Is it considered as Hiring of Vehicles as the Cost of Fuel is included ?

Ans. It is considered as Renting of Vehicle and not hiring. See Notification No. 3/22-CT (R) dated 13.7.22 effective from 18.7.22 (Para No. V) amending original Notification No. 11/17-CT (R) dated 28.06.17 and Para No. 9 of CBIC Circular No. 177/09/2022-TRU dated 3.5.22. This is not GTA service.

Q. Whether the Vehicle Hiring provided to GTA is exempt from GST ?

Ans. YES as explained at serial no.2 by Sh. Sadanand Bulbule, Sir.

Read both notifications thoroughly. Focus on the difference of language between both notifications.

[Sadanand Bulbule]

Dear Sirji

Rightly analysed not only the langauge of notifications, but the foundational concept of renting and hiring.There is sea diifference between these two. This creates higher awareness of understanding tax statutes. You have invested lot of time and concentration on this Sir.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, A huge thank you for your outpourings.Really credit goes to you. I have learnt a lot from your art of drafting. Your flowery language which is full of similes, metaphors, analogies idioms, proverbs etc. communicates the exact message and creates impression upon the reader. At the same time, it does not belittle the importance of simple language. Both have different platforms and different purposes and different class of readers. You draft your replies accordingly and we should draft accordingly.

 

 

                                   

 

[Shilpi Jain]

Exemption is applicable. Though ensure you have an agreement which will support the fact that it is a hiring to a GTA,

[Sadanand Bulbule]

For renting vehicles to a GTA ,which is exempt from GST based on Notification No. 12/2017, you may take the support of the following:

 In Re: M/s. Liberty Translines, - 2020 (9) TMI 1104 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA 

AI Summary

Vehicle hiring exemption to goods transport agents clarified: renting vehicles to GTA is GST-exempt, agreement not required.
Provision of vehicles to a goods transport agent on a fixed-kilometre basis with fuel and driver costs borne by the owner can qualify as hiring/renting of vehicles and, when supplied to a GTA for transportation of goods, is exempt from GST; a written agreement is not necessary for that characterization, though documentary support is advisable, while services provided by the GTA remain taxable.