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TMI Blog5% or 12% GST: A Strategic Choice for Rent-a-Cab Service ProvidersX X X X Extracts X X X X X X X X Extracts X X X X ..... 5% or 12% GST: A Strategic Choice for Rent-a-Cab Service Providers X X X X Extracts X X X X X X X X Extracts X X X X ..... 0; 𝘁𝗵𝗲 𝘀𝗰𝗲𝗻𝗮𝗿𝗶𝗼: A rent-a-cab service provider charging 5% GST with restricted Input Tax Credit (ITC) explored ways to maximize cost efficiency and ITC benefits. Here's what was uncovered: 🚗 𝗨𝗻𝗱𝗲𝗿 𝘁𝗵𝗲 5% 𝗚𝗦𝗧 x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 314;𝗼𝗱𝗲𝗹: ITC is restricted to services within the same line of business. ITC can only be claimed on hiring/renting of passenger transport where vendors also charge 5% GST. If vendors charge 12% GST, the additional 7% becomes a cost. ITC on inputs, input services (outside the same business line), and capital goods 𝗰𝗮𝗻𝗻 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6;𝘁 be availed, as per the chosen 5% GST option. 📈 𝗨𝗻𝗱𝗲𝗿 𝘁𝗵𝗲 12% 𝗚𝗦𝗧 𝗺𝗼𝗱𝗲𝗹: Full ITC benefits can be availed on inputs, input services, and capital goods-no restrictions! However, as customers are not eligible for ITC (whether GST is 5% or 12%), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher GST rate can impact pricing, requiring careful strategy. 🔑 𝗦𝗼, 𝗵𝗼𝘄 𝘄𝗮𝘀 𝘁𝗵𝗶𝘀 𝗰𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲 𝗮𝗱𝗱𝗿𝗲𝘀𝘀𝗲𝗱? By leveraging 𝗱𝗶𝗳x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 307;𝗲𝗿𝗲𝗻𝘁𝗶𝗮𝗹 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 -offering attractive rates for clients opting for the 12% GST bracket to make the transition viable while balancing cost efficiency and ITC recovery. 💼 𝗧𝗵𝗲 𝗸𝗲𝘆 𝘁𝗮𝗸𝗲ҳ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02;𝘄𝗮𝘆: For rent-a-cab service providers, choosing between 5% and 12% GST isn't just about compliance-it's a strategic decision that directly impacts profitability and cost recovery. 📌 𝗪𝗵𝗮𝘁 𝗮𝗯𝗼𝘂𝘁 𝗿𝗲𝗻𝘁-𝗮-𝗰𝗮𝗯 𝘀𝗲x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 319;𝘃𝗶𝗰𝗲𝘀 𝗽𝗿𝗼𝘃𝗶𝗱𝗲𝗱 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗮𝗴𝗴𝗿𝗲𝗴𝗮𝘁𝗼𝗿𝘀? For operators offering services via platforms like Rapido, Uber, or Ola, there's no option to choose between 5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 12% GST. Under GST law, the aggregator must pay GST at 5% on behalf of the cab operator. This leaves operators with ITC on GST paid for car purchases that cannot be utilized, directly impacting profitability. X X X X Extracts X X X X X X X X Extracts X X X X
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