Exemptions Related To Transportation of passengers [ Entry No. 15 & 17 ] - GST Ready Reckoner - GST

Exemption Entry 15 Exemptions related to transport of passengers, with or without accompanied belongings Services are exempt if the services are provided through air, embarking from or terminating in an airport located in the State of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; non-air conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire; or stage carriage other than air-conditioned stage carriage; Exception:- Provided that nothing contained in items (b) and (c) above shall apply to services supplied through an electronic commerce operator, and notified under Section 9(5) of the CGST Act, 2017 . The Department vide letter DOF No 334/03/2010 TRU Dated 01-07-2010 had clarified that in round trip tickets involving multiple journeys/ fights sectors with one of the sectors involving embarkation or disembarkation at North-Eastern States/ Bagdogra, the journey/flight/sector that involves embarkation or disembarkation at North-Eastern States/ Bagdogra would alone be covered under exemption provided to Transport of passenger by Air service. That said, in cases of flight embarking from or terminating on any of the airports mentioned in the Notification the Service provider shall have the benefit of exemption, irrespective of multiple journeys. Example Mr Ramesh embarked on a journey from Bagdogra airport on 1.12.2017, no GST is leviable on his air travel. Exemption Entry 17 Service of transportation of passengers, with or without accompanied belongings, by: Railways in a class other than first class; or an air-conditioned coach; Metro, monorail or tramway; Inland waterways; Public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and Metered cabs or auto rickshaws (including e-rickshaws) Exception:- Provided that nothing contained in items (b) and (c) above shall apply to services supplied through an electronic commerce operator, and notified under Section 9(5) of the CGST Act, 2017 . Mega Exemption Notification No. 12/2017-Central Tax (rate) dated 28.06.2017 defines the relevant terms as follows: (za) e-rickshaw means a special purpose battery powered vehicle of power not exceeding 4000 watts, having three wheels for carrying goods or passengers, as the case may be, for hire or reward, manufactured, constructed or adapted, equipped and maintained in accordance with such specifications, as may be prescribed in this behalf; (zp) metered cab means any contract carriage on which an automatic device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 and the rules made thereunder but does not include radio taxi; (zv) radio taxi means 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 the Global Positioning System or General Packet Radio Service; All of the above services mentioned are exempt except Exception. Example Shriman travelled in an auto rickshaw from Lajpat Nagar to Pitampura in Delhi. His services would be exempt from tax as it is a service of transportation of passengers. Some Important point 1. Situations in which corporate recipients are liable to pay GST on renting of motor vehicles designed to carry passengers. [ Circular No. 177/09/2022-TRU ] Issues Held that Solution In case of services provided by a non-body corporate to a body corporate for transport of passengers tax is required to be paid by the body corporate under RCM whether tax is required to be paid by the body corporate under RCM Renting of motor vehicle with operator for transport of passengers falls under Heading 9966. According to the explanatory notes to heading 9966, the service covered here is renting of motor vehicle for transport of passengers for a period of time where the renter defines how and when the vehicles will be operated, determining schedules, routes and other operational considerations. Passenger transport services on the other hand fall under Heading 9964. According to the explanatory notes Heading 9964 covers passenger transport services over pre-determined routes on pre-determined schedules Therefore, a clear distinction exists in service of transport of passengers and renting of a vehicle that is used for transport. it is clarified that where the body corporate hires the motor vehicle (for transport of employees etc.) for a period of time, during which the motor vehicle shall be at the disposal of the body corporate, the service would fall under Heading 9966 , and the body corporate shall be liable to pay GST on the same under RCM. It may be seen that reverse charge thus would apply on act of renting of vehicles by body corporate and in such a case, it is for the body corporate to use in the manner as it likes subject to agreement with the person providing vehicle on rent. 2. Whether same line of business in case of passenger transport service and renting of motor vehicles includes leasing of motor vehicles without operators. [ Circular No. 206/18/2023-GST dated 31.10.2023 ] Services of transport of passengers by any motor vehicle (SAC 9964) and renting of motor vehicle designed to carry passengers with operator (SAC 9966), where the cost of fuel is included in the consideration charged from the service recipient attract GST at the rate of 5% with input tax credit of services in the same line of business. Same line of business as stated in the notification No. 11/2017- Central Tax (Rate) means service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle . It is hereby clarified that input services in the same line of business include transport of passengers (SAC 9964) or renting of motor vehicle with operator (SAC 9966) and not leasing of motor vehicles without operator (SAC 9973) which attracts GST and/or compensation cess at the same rate as supply of motor vehicles by way of sale.