The Delhi Government notified the recent changes in Reverse Charge Mechanism on renting of motor vehicles.
The Governor of the National Capital Territory of Delhi, on the recommendations of the Council amended the notification of the Government of the National Capital Territory of Delhi, in the Department of Finance (Revenue-1), No.13/2017- State Tax (Rate), dated the 30th June, 2017.
The notification pertains to the categories of services on which tax will be payable under the reverse charge mechanism under the CGST Act.
Entry No. 15 of the notification prior to the amendment stated that the services provided by way of renting a motor vehicle provided to a body corporate. 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.
However, the government notified the substitution of Entry No. 15 which says that services provided by way of renting any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate.
“Any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6% to the service recipient,” the notification clarified.
In other words, 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.Subscribe Taxscan AdFree to view the Judgment