GST INDIA DAILY

Concepts of RCM article available as a parent article for this one. Please go through if you want to know about basic concepts.

Is RCM levy on renting of a Motor vehicle applicable from 2017?

No. There was no levy under RCM for renting of a Motor vehicle in the first RCM Notification No.13/2017 – CT – 28.06.2017.

When RCM levy is enforced for Renting of a Motor Vehicle?

There was no levy for RCM on renting of motor vehicles in the six amendment notifications ( Notification No:22 & 332017, No.03,15 and 29/2018, No.05/2019).

The Notification No:22/2019 – CT – Dt: 30.09.2019, for first time levied reverse charge (RCM) on renting of motor vehicles.

Notification No: 22/2019 – CT – Dt: 30.09.2019

RCM on Renting of Motor Vehicles was recommended in 37th GST Council meeting held on 20.09.2019 and it comes in to force vide Notification No:22/2019 – CT – Dt: 30.09.2019. In effect of this,

Serial No.15 of the Notification No:13/2017 – CT – Rate has been added vide Notification No: 22/2019.

Service Provider refers to any person other than a body corporate paying GST @5% on renting of a motor vehicle with an input tax credit [If it is the same line of business] to any body corporate in taxable territory.

No Clarity is provided regarding the person to whom RCM is applicable in Notification No: 22/2019 – CT – 30.09.2019.

The wording of the notification that “any person other than a body corporate, paying GST @5%” is not free from doubt and needs amendment/clarification from the perspective of drafting.

Clarification has been provided regarding the person to whom RCM is applicable vide Circular No: 130/49/2019 – GST – Dt:31.12.2019.

Where the supplier of the service charges GST @ 12% from the service recipient, the service recipient shall not be liable to pay GST under RCM; andWhere the supplier of the service doesn’t charge GST @12% from the service recipient, the service recipient shall be liable to pay GST under RCM.

The Amendment vide Notification No: 29/2019 – CT – Rate – Dt:31.12.2019 has been made to confirm the clarity given in Circular No.130/49/2019 – 31.12.2019:

Any person other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging GST @12% to any body corporate located in the taxable territory.

Conclusion :

RCM is applicable to any body corporate who is receiving service on renting of a motor vehicle from any person, other than body corporate who does not issue an invoice charging GST @12%.This notification is applicable from 01.10.2019.

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Thanks

Manimaran Kathiresan (01.01.2020)