CBIC Clarifies GST Treatment for Input Services in Passenger Transport and Vehicle Rental [Read Circular]

Based on the recommendations of the GST Council, the Central Board of Indirect Taxes and Customs (CBIC) released clarification on the Goods and Services Tax (GST) treatment for the input services in passenger transort and vehicle rental.

The services involving the transportation of passengers using motor vehicles (SAC 9964) and the rental of motor vehicles specifically designed for passenger transport, along with an operator (SAC 9966), are subject to a 5% GST rate. This rate applies when the cost of fuel is encompassed in the fees charged to the service recipient. Furthermore, businesses providing services within the same industry can avail of input tax credit.

Same line of business as stated in the notification No. 11/2017- Central Tax (Rate) means “service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle”.

The board has clarified that input services in the same line of business include transport of passengers (SAC 9964) or renting of motor vehicle with operator (SAC 9966) and not leasing of motor vehicles without operator (SAC 9973) which attracts GST and/or compensation cess at the same rate as supply of motor vehicles by way of sale.

To Read the full text of the Circular CLICK HERE

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