GST on Corporate Car Rental in India
A practical 2026 field guide for CFOs, controllers and travel-desk owners — rates, when ITC is blocked, when reverse-charge fires, and the invoice fields your GSTIN must show.
The rates at a glance
| Scenario | Rate | ITC to recipient |
|---|---|---|
| Passenger transport with driver (SAC 9964) — supplier's default | 5% | Not available (blocked) |
| Same service, supplier opts for higher rate | 12% | Available |
| Motor vehicle lease without operator (or recipient supplies fuel) | 18% | Available |
| Staff transport bus > 13 seats | 5% / 12% | Available (capacity exception) |
When ITC is blocked (and when it isn't)
Section 17(5)(b) blocks Input Tax Credit on motor-vehicle hire with a seating capacity of 13 or less. The three main exceptions:
- You are yourself in the business of supplying such vehicles (fleet operator, aggregator).
- You use the service for further supply of the same category (a DMC re-selling to a corporate).
- Vehicle seating capacity is greater than 13 — typical staff transport buses and mini-buses.
Reverse charge (RCM) — the 30-second rule
If a non-body-corporate supplier rents a passenger motor vehicle to a body-corporate recipient at the 5% (no-ITC) rate, GST is paid by the recipient under reverse charge (Notification 22/2019-CT(R)).
If either (a) the supplier is a body corporate, or (b) the supplier opts for 12% with full ITC — forward charge applies and RCM is off.
Invoice fields your GSTIN must see
- Supplier GSTIN, name, address, state code
- Recipient GSTIN (yours), name, address, state code
- Invoice number, date and (if applicable) IRN / QR
- SAC 9964 with clear description of the trip
- Package / route / vehicle class / driver name
- Place of supply (state of embarkation for inter-state)
- Taxable value, CGST + SGST or IGST split, total
- 'Tax payable under reverse charge: Yes / No' — mandatory
Common questions
What is the GST rate on corporate car rental in India?+
Passenger transport with a driver falls under SAC 9964. Renting a motor vehicle designed to carry passengers (with fuel) attracts either 5% GST without Input Tax Credit (ITC), or 12% GST with full ITC — the supplier chooses the regime and this must be stated on the invoice. Where the vehicle is supplied on lease without an operator, or the recipient supplies fuel, 18% may apply. Confirm the rate on your vendor's tax invoice before recording it.
Is Input Tax Credit available on corporate car rental?+
By default, Section 17(5)(b) of the CGST Act blocks ITC on renting or hiring motor vehicles with seating capacity ≤ 13 persons. ITC is allowed only where (i) the recipient itself is in the business of supplying such vehicles, (ii) the service is used for further supply of the same category, or (iii) the vehicle has a seating capacity > 13 persons (larger buses / staff transport). Employee shuttle buses with capacity > 13 are ITC-eligible; a 5-seat sedan for an executive is not.
When does reverse charge (RCM) apply?+
When a non-body-corporate supplier (e.g. a proprietorship or partnership fleet operator) rents a passenger motor vehicle to a body-corporate recipient at the 5% rate (without ITC), GST is payable by the recipient under reverse charge under Notification 22/2019-CT(R). If the supplier is itself a body corporate, or opts for the 12% (with ITC) regime, forward charge applies. Your finance team should tag every vendor with 'forward vs RCM' at onboarding.
What must a compliant GST invoice for car rental contain?+
Supplier name, address, GSTIN and place of supply; recipient name, address, GSTIN; invoice number and date; SAC 9964; description of trip (route, date, vehicle class, package); taxable value; CGST + SGST or IGST split; total invoice value; signature / digital sign. For inter-state rides, place of supply is the location where the passenger embarked (Section 12(9) IGST Act) — this determines whether IGST or CGST+SGST applies.
Employee reimbursements vs a corporate MSA — what's the GST difference?+
When employees pay a cab aggregator and get reimbursed, the invoice is in the employee's name — the company usually loses the tax credit entirely and inherits reconciliation risk. Under a corporate MSA, the invoice is raised to the company's GSTIN, place of supply is captured correctly, RCM is applied where applicable, and any allowable ITC (larger buses, employer-provided factory transport for the workforce) is claimable. This alone often justifies moving off reimbursements.
Are there state-level nuances?+
Yes. Inter-state trips need IGST — a Mumbai-to-Pune drop starting in Maharashtra and ending in Maharashtra is intra-state (CGST+SGST), but a Delhi-to-Jaipur drop is inter-state (IGST). Outstation packages that cross state lines mid-trip use the origin state per Section 12(9) IGST Act. Fixed-facility employee transport at a plant may qualify for the 'obligatory under law' ITC path if the state's Factories Act mandates transport for late shifts.
Commutec issues one consolidated GSTIN-mapped invoice per legal entity, per month — with SAC 9964, POS logic and RCM flags applied automatically.
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