RCM INPUT QUERRY ON PAYMENT OT GOVERNMENT

[Dheeraj Kaushik]

I have made payment of Rs. 1.50 lac towards a special number of RC to the state government at the time of purchase of a vehicle used in my business.

 I have paid RCM against said payment of Rs. 1.50 lac as per notification 13/2017 as services availed form state government.

Now my query is whether I can avail   input tax credit (ITC) GST paid under the reverse charge mechanism (RCM) on services availed from the central or state government

if I am eligible to avail input then under what notification if any I can avail  input.

[Sadanand Bulbule]

You have not mentioned the type of motor vehicle for the purpose of Section 17[5][a] of the CGST Act. Be it may like that.

However there is clear difference between motor vehicle for the purpose of Section 17[5][a] and services availed from the  Governement Transpoort Depertment for the purpose of payment of tax under RCM.

If such vehicle is used in the course of business, ITC ia allowed in terms of Section 16[1] read with Notification [supra]. Therefore Section 17[5][a] should not come in the way of ITC availment.

[Pinnacle Tax Advisor]

At the outset, it is important to verify whether the amount paid to the State Transport Department for obtaining a special registration number is a statutory charge under the Motor Vehicles Act or a consideration for services provided by the State Government. If it is a statutory charge and not a fee for services supplied, it will not fall under the ambit of RCM.

Now, addressing your query:

• If the special registration number is obtained for a motor vehicle used for the transportation of persons with an approved seating capacity of not more than thirteen, then ITC of GST paid under RCM will not be available. This is because ITC on such vehicles and related services (insurance, repair & maintenance, services etc.) is blocked under Section 17(5) of the CGST Act.

• However, if the special registration number pertains to a motor vehicle used for the transportation of goods in the course of business, then ITC can be claimed on the GST paid under RCM.

[Sadanand Bulbule]

Paying premium for a fancy vehicle number is NOT a service for RCM under GST. It’s a statutory function by the State Transport Department. 

[Ganeshan Kalyani]

If it is for a vehicle having seating capacity upto 13 person then ITC is not allowed. For other vehicle ITC is allowed.

[Shilpi Jain]

If this is for registration of the vehicle there is an exemption for services of registration provided under any law. You need not have paid any GST under RCM. 

Adjust it against other RCM liability

AI Summary

Special vehicle registration number payment: ITC hinges on whether the charge is statutory or a taxable service and vehicle use. Whether GST paid under the reverse charge mechanism on a special registration number can be claimed as input tax credit depends on whether the payment is a statutory charge (not subject to RCM) or a consideration for services; if treated as RCM-taxable service, ITC is blocked under Section 17(5) for passenger vehicles with seating up to thirteen, but allowed where the vehicle is used for carriage of goods. Exemptions for registration services and adjustment against other RCM liabilities were also noted.