5% or 12% GST: A Strategic Choice for Rent-a-Cab Service Providers

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....% or 12% GST: A Strategic Choice for Rent-a-Cab Service Providers<br>By: - Pradeep Reddy<br>Goods and Services Tax - GST<br>Dated:- 21-2-2025<br>For businesses in the rent-a-cab sector, GST compliance often means grappling with: &#129300; Restricted ITC, balancing costs, and complex regulations. But what if compliance could also help optimize costs? &#120283;&#120306;&#120319;&#120306;'&#120320....

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....; &#120321;&#120309;&#120306; &#120320;&#120304;&#120306;&#120315;&#120302;&#120319;&#120310;&#120316;: A rent-a-cab service provider charging 5% GST with restricted Input Tax Credit (ITC) explored ways to maximize cost efficiency and ITC benefits. Here's what was uncovered: &#128663; &#120296;&#120315;&#120305;&#120306;&#120319; &#120321;&#120309;&#120306; 5% &#120282;&#120294;&#120295; &#1203....

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....14;&#120316;&#120305;&#120306;&#120313;: ITC is restricted to services within the same line of business. ITC can only be claimed on hiring/renting of passenger transport where vendors also charge 5% GST. If vendors charge 12% GST, the additional 7% becomes a cost. ITC on inputs, input services (outside the same business line), and capital goods&nbsp;&#120304;&#120302;&#120315;&#120315;&#120316....

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....;&#120321;&nbsp;be availed, as per the chosen 5% GST option. &#128200; &#120296;&#120315;&#120305;&#120306;&#120319; &#120321;&#120309;&#120306; 12% &#120282;&#120294;&#120295; &#120314;&#120316;&#120305;&#120306;&#120313;: Full ITC benefits can be availed on inputs, input services, and capital goods-no restrictions! However, as customers are not eligible for ITC (whether GST is 5% or 12%), a h....

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....igher GST rate can impact pricing, requiring careful strategy. &#128273; &#120294;&#120316;, &#120309;&#120316;&#120324; &#120324;&#120302;&#120320; &#120321;&#120309;&#120310;&#120320; &#120304;&#120309;&#120302;&#120313;&#120313;&#120306;&#120315;&#120308;&#120306; &#120302;&#120305;&#120305;&#120319;&#120306;&#120320;&#120320;&#120306;&#120305;? By leveraging &#120305;&#120310;&#120307;&#1203....

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....07;&#120306;&#120319;&#120306;&#120315;&#120321;&#120310;&#120302;&#120313; &#120317;&#120319;&#120310;&#120304;&#120310;&#120315;&#120308; -offering attractive rates for clients opting for the 12% GST bracket to make the transition viable while balancing cost efficiency and ITC recovery. &#128188; &#120295;&#120309;&#120306; &#120312;&#120306;&#120326; &#120321;&#120302;&#120312;&#120306;&#12030....

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....2;&#120324;&#120302;&#120326;: For rent-a-cab service providers, choosing between 5% and 12% GST isn't just about compliance-it's a strategic decision that directly impacts profitability and cost recovery. &#128204; &#120298;&#120309;&#120302;&#120321; &#120302;&#120303;&#120316;&#120322;&#120321; &#120319;&#120306;&#120315;&#120321;-&#120302;-&#120304;&#120302;&#120303; &#120320;&#120306;&#1203....

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....19;&#120323;&#120310;&#120304;&#120306;&#120320; &#120317;&#120319;&#120316;&#120323;&#120310;&#120305;&#120306;&#120305; &#120321;&#120309;&#120319;&#120316;&#120322;&#120308;&#120309; &#120302;&#120308;&#120308;&#120319;&#120306;&#120308;&#120302;&#120321;&#120316;&#120319;&#120320;? For operators offering services via platforms like Rapido, Uber, or Ola, there's no option to choose between 5% ....

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....or 12% GST. Under GST law, the aggregator must pay GST at 5% on behalf of the cab operator. This leaves operators with ITC on GST paid for car purchases that cannot be utilized, directly impacting profitability.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....