Rent-a-cab and car hire have their own GST nuances, especially when you serve companies. This guide covers the rates, reverse charge, and how to invoice car hire so filing stays clean.
Renting of a motor vehicle designed to carry passengers, with the cost of fuel included, is commonly taxed at 5% without input tax credit or 12% with credit, similar to cab services. The fuel-included condition matters, so read your contracts carefully.
| Scenario | Typical treatment |
|---|---|
| Fuel included in hire charge | 5% (no ITC) or 12% (with ITC) |
| Vehicle only, fuel billed separately | May differ, confirm with your CA |
When a non-body-corporate supplier hires passenger vehicles (fuel included) to a body corporate, reverse charge can apply and the corporate client pays the GST. Employee-transport and corporate-mobility contracts almost always need this handled precisely.
Pure self-drive rentals (customer drives, no driver, no fuel supplied by you) can be treated differently from chauffeur-driven hire. Classify each product correctly, self-drive versus with-driver, because the GST treatment and paperwork are not the same.
Car rental billing gets messy fast: deposits, extra kilometres, fuel adjustments, damage recovery and GST all on one invoice. Rental software computes the charges, applies the right GST, and issues a clean invoice. See our self-drive car rental software and car rental software.
Renting a passenger motor vehicle with fuel included is commonly 5% without input tax credit or 12% with credit. Confirm the current rate and conditions with your CA.
Often yes. Non-body-corporate suppliers hiring passenger vehicles with fuel to a body corporate may fall under reverse charge, so the company pays the GST.
Not necessarily. Self-drive rentals (no driver, no fuel supplied by you) can be treated differently. Classify each product correctly and confirm with your CA.
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