5 GST on Rent A Cab

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Rajkumar Gutti

773 Points Posted on 17 July 2024

We are a body corporate. we are paying RCM on rent a cab service on which service provider does not charge any GST in his bill

Those rent a cab service provider charge 5% GST , we are not paying any RCM GST.

But recently we heard that those service provider charging 5% GST in his bill, these services are also liable to pay RCM.

Is this information is correct. If yes , which notification or circular.

Please guide in this regard.

Replies (2)

Quick Summary

Body corporates paying for rent-a-cab services need to be aware of recent GST changes. If the service provider is not a body corporate and charges 5% GST without input tax credit (ITC), the body corporate recipient must pay GST under the Reverse Charge Mechanism (RCM). This applies even if the cab operator is unregistered. However, RCM is not applicable if the provider is a body corporate or charges 12% GST, or if the recipient is not a body corporate. Importantly, ITC on the RCM paid is generally blocked unless specific conditions are met, such as a statutory obligation for employee transport.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 03 October 2024

The information you heard is correct ¹. The GST Council recommended that services of renting vehicles supplied by non-body corporate entities to body corporate entities be brought under the reverse charge mechanism (RCM) ¹. The government has issued notification No. 22/2019-CT (R) dated 30.09.2019 to amend the parent RCM notification No. 13/2017-CT (R) dated 28.06.2017, which was issued under section 9(3) of CGST Act, 2017 ¹. Here are the conditions under which RCM will be applicable ¹: - The service provider/cab operator is a non-body corporate person (e.g., a proprietorship concern, HUF, or partnership firm). - The cab operator is unregistered or charges 5% GST in the bill without availing ITC. - The service recipient is a body corporate (e.g., a company, including a private limited company or corporation set under a separate statute). In such cases, GST will be paid by the service recipient (body corporate) on their own under RCM ¹. However, please note that RCM provisions are not applicable if the cab operator/service provider is a body corporate or charges 12% GST (normal rate under HSN Code 9964) with or without availing ITC ¹. Additionally, if the service recipient is not a body corporate (e.g., a proprietorship or partnership firm), RCM provisions will not apply ¹.

Aashok Kumar Sharma

Finance/Compliance Consultant

75671 Points Posted on 07 November 2026

RCM yes; ITC generally blocked:

• Renting of a motor vehicle designed to carry passengers, where fuel cost is included, by a supplier other than a body corporate, to a body corporate: RCM at 5% (Notf 13/2017, Sl. 15), unless the supplier charges 12% with ITC under forward charge.

• ITC on the 5% RCM paid: Sec 17(5)(b)(iii) blocks ITC on rent-a-cab, unless (a) the government makes it obligatory for employers to provide (e.g. women night-shift cab rules under State laws) or (b) the cab is used for making an outward taxable supply of the same category (e.g. you're also in the cab business).

• So a body corporate using cabs for employee transport generally can't claim ITC, unless it's under a statutory obligation (like a shops and establishments rule for night-shift transport).

• The RCM is still payable (cash), even if ITC is blocked.