GST vide Circular No. 130/2019 dated 31st December, 2019 Clarifies RCM on renting of motor vehicles.
- GST applicability on renting of motor vehicles: Suppliers of service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient have an option to pay GST either at 5% with limited ITC (of input services in the same line of business) or 12% with full ITC.
- By 37th GST council meeting, Sl.No. 15 was inserted in the RCM notification as below,
| Sl. No. | 15 |
| Category of Supply of Services | Services provided by way of renting of a motor vehicle provided to a body corporate. |
| Supplierof Service | Any person other than a body corporate, paying central tax at the rate of 2.5% on renting of motor vehicles with input tax credit only of input service in the same line of business |
| Recipient of service | Any body corporate located in the taxable territory. |
- After issuance of notification, references have been received by the department that when a service is covered by RCM, GST would be paid by the service recipient and not by the supplier.
Therefore, by this circular it has been clarified as below,
- To state that RCM shall be applicable on the service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient only if the supplier fulfils all the following conditions:–
(a) is other than a body-corporate;
(b)does not issue an invoice charging GST @12% from the service recipient; and
(c) supplies the service to a body corporate.
http://www.cbic.gov.in/resources//htdocs-cbec/gst/circular-cgst-130-new.pdf