Exemption related to Services by way of giving on hire [ Entry No. 22 ] - GST Ready Reckoner - GST

Exemption Entry 22 Exemption related to Services by way of giving on hire Services by way of giving on hire - (a) to a State transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (aa) to a local authority, an Electrically operated vehicle meant to carry more than twelve passengers; (b) to a goods transport agency, a means of transportation of goods (c) motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education upto higher secondary school or equivalent. Scope The scope of the exemption is subject to some restrictions which can be easily understood from the below table: Who is eligible What specifically is exempt Limits for Exemption Owner of Motor Vehicle Services by way of giving on hire - to a State transport undertaking, a motor vehicle meant to carry more than twelve passengers; or to a goods transport agency , a means of transportation of goods; motor vehicle for transport of students, faculty and staff , to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education upto higher secondary school or equivalent. to a local authority, an Electrically operated vehicle meant to carry more than twelve passengers; The term State transport undertaking has been defined in Para 2 (zg) of the Mega Exemption Notification no. 25/2012 dated June 20, 2012 as having the meaning assigned to it in clause (42) of section 2 of the Motor Vehicles Act, 1988; Section 2 (42) of the Motor Vehicles Act, 1988 defines the State transport undertaking to mean any undertaking providing road transport service, where such undertaking is carried on by,- (a) the Central Government or a State Government ; (b) any Road Transport Corporation established under section 3 of the Road Transport Corporations Act, 1950; (c) any municipality or any corporation or company owned or controlled by the Central Government or one or more State Governments, or by the Central Government and one or more State Governments. (d) Zilla Parishad or any other similar local authority Example: Ajay an owner of a motor vehicle gives his vehicle to a goods transport agency for hiring and transportation of goods. Such services shall be considered as exempt services. Few clarifications : Circular No. 164 /20 /2021-GST clarifies Issues Held that Whether service of renting of vehicles to State Transport Undertakings (STUs) and Local Authorities is exempt from GST it is clarified that the expression giving on hire in Sl. No. 22 of the Notification No. 12/2017-CT (Rate) includes renting of vehicles . Accordingly, services where the said vehicles are rented or given on hire to State Transport Undertakings or Local Authorities are eligible for the said exemption irrespective of whether such vehicles are run on routes, timings as decided by the State Transport Undertakings Hence Exempt