CBIC vide notification no. 29/2019 Dt. 31.12.2019 has amended it’s previous notification 22/2019 Dt. 30.09.2019 has been made applicable retrospectively from 1st October 2019.
The said notification deals with service of renting motor vehicles. Let’s discuss both the notification side by side and check what has been changed:
||Services provided 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, 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 per cent to the service recipient.
||Any body corporate located in the taxable territory.”.
||Services provided by way of renting of 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.
||Any body corporate located in the taxable territory.
The earlier notification was a bit confusing and was loosely drafted where it was not clear whether it talked about vehicles carrying passenger or goods.
Now with the new notification the ambiguity has been removed and many things have been clarified:
- Firstly they have clarified that it shall be applicable on motor vehicle for carrying passenger and where cost of fuel is also included so it’s a dual condition if any of the condition is not satisfied this won’t be applicable.
- Secondly as far as supplier is considered in the earlier notification they had used to word any person paying tax at the rate of 2.5% which meant that this would cover only registered person however now they have changed the language to “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 per cent to the service recipient.” Now this has created new confusion whether even the unregistered person would be covered under this because they can’t issue invoice at 6% and they have not been excluded anywhere which means if corporate takes service from unregistered person will they have to pay RCM under reverse charge?
Let’s see if any further clarification is provided.
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