GOODS AND SERVICE TAX (GST) EXPLAINED FOR TRANSPORT SERVICES

Government of India has approved 4 tax brackets for services and goods at Nil, 5%, 12%, 18% and 28% on 19 May 2017 during the 14th GST Council meeting.

The key implication for Transport Sector is as follows:

SCHEDULE OF GST RATES FOR TRANSPORT SERVICES

1. Transport of passengers by rail (other than sleeper class) – 5% with ITC (Input Tax Credit) of input services

2. Renting of motorcab – 5% (If fuel cost is borne by the service recipient, i.e. Self-drive, then 18% GST will apply)

3. Transport of passengers, by- (i) Air conditioned contract/stage carriage other than motorcab (ii) a radio taxi – 5%

4. GST exemptions:Services by way of giving on hire to a state transport undertaking, a motor vehicle meant to carry more than twelve passengersService of transportation of passengers, with or without accompanied belongings, by—

(i) Railways in a class other than (A) first class; or (B) an air-conditioned coach

(ii) Metro, monorail or tramway;

(iii) Inland waterways;

(iv) Public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and

(v) Metered cabs or auto rickshaws (including E-rickshaws);

 

SCHEDULE OF GST RATES FOR GOODS

1. Electrically operated vehicles, including two and three wheeled electric motor vehicles – 12%

2. Motor vehicles (including Parts and accessories) for the transport of ten or more persons, including the driver – 28%

3.  New pneumatic tyres, of rubber used in motor cars, buses or lorries, aircraft, motor cycles etc – 28%

 

KEY POINTS

(i) Electric Vehicles attract 6% of excise duty and 0-6% VAT in different states. In some states like Delhi and Bangalore, there was no VAT on electric vehicles. Thus, the cost of electric vehicles will be increased in some states under GST

(ii) Hybrid vehicles attract excise duty of 12.5%. The government has not given any special treatment for hybrid vehicles under GST. Thus, it will fall under the large cars category and will attract a rate of 28% with 15% cess

(iii) Commercial vehicles currently attract 30.2% tax (including both excise and VAT). Under GST, the commercial vehicles will attract a rate of 28%. This will help to save money for bus transport undertakings

(iv) Radio Taxis including Taxi Aggregator are currently paying a tax of 6% on transport services. GST rate for transport services is fixed at 5%

(v) The government has kept 5% GST rate on air conditioned contract/stage carriage. However, there is no tax on metro and monorail. There is need to promote quality public transport system in the city

(vi) There is no clarity on the GST implication on outsourcing of city-bus or metro operation under PPP. This used to comes under service tax ambit with a tax rate of 15%