GST INDIA DAILY

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  enforce for Renting  of  a Motor Vehicle?

There was no levy for RCM on renting of motor vehicles in the six amendmentnotifications   (    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 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 “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 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.

Conclusions:

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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Disclaimer:

The views expressed in this article are of the  CA.  Manimaran  Kathiresan  (Author Member of Team GSTCORNOR®). The information cited in this article has  been drawn from various provision of The CGST Act, Rules, ICAI publications  and  other  various  sources. While every effort has been made to keep, the information cited in this article error free, GSTCORNOR® does not take the responsibility for any typographical or clerical error which may have crept in while compiling the information provided in this article.