Question15:

 We are using services of vehicle hire for travelling to various locations for official use from who is not registered under GST. Now there is a question that at what rate we will pay the GST under reverse Charge and are we eligible for input credit.

Answer:

 According to the provisions of Section 7(1) of CGST Act, 2017  renting of vehicle is covered under the term 'Supply' and would be leviable to tax under the GST regime at the appropriate rate applicable according to HAS Code 9966 notified under Notification No. 11/2017-CT (R) dated 28.06.2017 as amended.  The applicable rate of tax is 5% if ITC on the vehicle has not been availed and 12% if ITC on the vehicle has been availed. Regarding payment of tax on receipt of service of passenger vehicle on hire basis from an unregistered person, provision for payment of GST on reverse charge mechanism applicable under Section 9(4) of the CGST Act, 2017 was given under Notification No. 8/2017- CT (R) dated 28.6.20017. Application of the said Notification has been  postponed till 31.03.2017 vide Notification No. 38/2017 - CT (R) dated 13.10.2017. Accordingly, you need not to pay any tax on services received from unregistered person till the said date. As tax is not required to be paid, hence no ITC available. Otherwise also Section 17(5)(b)(iii) of CGST Act, 2017 prohibits availing of ITC on rent a cab  service. (Reply dt. 04/12/2017)