ITC Claim on SAC 996601, Goods and Services Tax - GST

[Ashish Gupta]

Hello Everyone,

I run a travel agency and I rent out buses. The SAC of my service will be 996601. So, could I claim ITC while buying a new Bus and at what rate should I charge GST to customers?

Please help

Posts / Replies

[YAGAY andSUN]

For your travel agency business where you rent out buses, here’s how GST applies to the purchase of a new bus and how you should charge GST to your customers.

1. Claiming ITC on Bus Purchase:

Since you are in the business of renting out buses, which is a taxable service under GST, you are eligible to claim Input Tax Credit (ITC) on the GST paid on the purchase of buses, provided they are used for business purposes.

• Eligibility for ITC: You can claim ITC on the GST paid for capital goods (in this case, buses) if they are used for providing taxable services. As long as the buses are used in your business of renting them out to customers (which is a taxable service), the ITC on the GST you pay while purchasing the buses should be available to you.

• Conditions: The ITC can be claimed in full, but if the buses are used for any non-business or exempt purpose, you would need to adjust the ITC accordingly.

2. Charging GST to Customers:

For the GST applicable to your bus rental services, you would generally fall under SAC 996601, which covers “Rental services of transport vehicles with or without operator”.

• GST Rate: The standard GST rate for renting of buses falls under the 18% category (9% CGST + 9% SGST/UTGST) if the service is taxable.

• Exemptions: If you are providing transportation services to a specified category of passengers (such as for religious, educational, or government purposes), there may be exemptions or different rates. However, in most regular cases for the rental of buses, the rate is 18%.

So, to sum up:

• ITC: You can claim ITC on the purchase of a new bus, as long as the bus is used for your taxable rental service.

• GST to Customers: You should charge 18% GST on the rental service, unless the service is exempt or there is a specific provision under the law that applies to your case.

Make sure to maintain proper documentation to back up your ITC claim, such as invoices for the bus purchase and records of how they are used for business purposes.