TaxTMI 
TaxTMI 
TaxTMI 
GST CHARGED 5% AND CLAIMED ITC
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....ST CHARGED 5% AND CLAIMED ITC <br> Query (Issue) Started By: - Deepak D Dated:- 3-12-2025 Goods and Services Tax - GST <br> Got 4 Replies <br> GST<br> <br> Dear Sir/Madam, One of my client providing the Renting services of Motor vehicles for transport of passengers charged 5% of GST and claimed Input Tax Credit. SCN received on this to either reverse the ITC or to pay differential output Tax any r....
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....emedy for this pls help --Reply By: KASTURI SETHI The Reply: The departments stand is correct. Relevant notification/law is very much clear. No judgement or circulars can be useful at all in this context. --Reply By: YAGAY andSUN The Reply: Under GST Notification 11/2017-CT(R) (as amended), renting of motor vehicles for transport of passengers at 5% GST is allowed only when the supplier....
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.... does not take input tax credit, except ITC on same-category vehicles used for providing the service. If full ITC has been availed, then the department treats this as wrong ITC, and the correct rate becomes 12%/18% depending on the service type and fuel cost conditions. Possible remedies (based on settled practice): 1. Correct the classification and pay differential tax with interest If the servic....
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....e conditions do not satisfy the "no ITC" restriction, you can opt to pay the higher output tax rate (12/18%) and retain the ITC. Many taxpayers use this option because law allows you to charge the higher rate and avail full ITC. 2. Reverse only the ineligible ITC (if taken inadvertently) If you want to remain in 5% category, you must reverse all ineligible ITC with interest under Section 50. This ....
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....is valid only if the service fits strictly within "renting of motor vehicle - 5% without ITC." 3. Reply to SCN with justification (if applicable) If the ITC taken relates only to same-category vehicles used in providing service (and allowed under the notification), attach: * Vehicle usage details * Input invoices * Rule 42/43 workings * Notification extracts showing credit is permissible for s....
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....ame-category inputs. Practical approach followed in most assessments: Shift the service to full-rate (12/18%) and pay differential tax, as this is legally clean and avoids reversal of ITC and penalties, provided you disclose and settle voluntarily. --Reply By: Shilpi Jain The Reply: Check whether ITC claimed is higher or the differential 7% is higher and accordingly do the needful. --Reply By: ....
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....Shilpi Jain The Reply: Though if your client has taken ITC of renting of vehicle or of another person providing the same service to him, that need not be reversed. That is allowed as per the rate notification. <br>***<br> Discussion Forum - Knowledge Sharing....