December 17, 2021

The market has been witnessing robust growth over the last few years as customers are increasingly shifting from traditional taxis to radio taxis. Nowadays, we call a cab to our doorsteps thanks to applications like Uber and Ola. But, do you know how to rent a cab under GST? Let’s find out.

GST clearly defines radio taxi as a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS).

Tax Rates under GST on Rent a Cab Services:

  1. The GST Council made it clear that the radio taxi operators or cab aggregators will bear the full liability to pay the new rate of Goods and Services Tax (GST) as applicable from July 1 2017.

  2. Government Seeks to amend notification No. 11/2017-CT(R) to reduce GST to provide option to transport of passengers by motor cab service providers to avail full ITC & discharge GST @ 12%.

  3. This comes as a big relief to a large number of taxi drivers who were worried about the GST impact on them. Due to this decision of the government, the drivers shall not be required to register under GST and further they even don’t have to bother about GST compliances.

GST rates on Rent a cab services is as follows:

Comparison of GST Charged with Service tax

Reverse Charge Mechanism (RCM) under GST for Rent a Cab Service:

Under RCM, the registered dealer (recipient of supply) shall discharge the GST liability on supply of goods or services from unregistered dealer, accordingly if any Service provider of Rent a cab ,receives services from unregistered dealers, he has to discharge GST liability (Sec 9(4) of CGST Act)

However the same has been suspended up to 31st March 2018, hence the registered person shall not be liable to pay GST under RCM till 31-03-2018.

Well, that was the concept of GST on renting cab services. For further queries regarding GST, taxation, and CA in Bangalore, get in touch with us.

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