In short
| Item | What applies | Since | Good to know |
|---|---|---|---|
| Cab hire with driver and fuel | 5% or 18% | 22 Sep 2025 | The 18% option was 12% from 22 Aug 2017 to 21 Sep 2025. |
| Credit (ITC) on the 5% option | Only on cab hire bought from other operators, capped at 5% | 20 Oct 2023 | No cap from 13 Oct 2017 to 19 Oct 2023. No credit on cars, servicing or software. |
| Credit (ITC) on the 18% option | Full credit, including on new cars | 22 Sep 2025 | Petrol, diesel and CNG are outside GST, so there is no credit on them. Auto LPG is inside GST. |
| Electric cab hire, charging included | 5% or 18% | 1 Nov 2026 | Credit on hire bought from others is capped at 5% of the value. |
| Renting a cab with driver and fuel to a company, as a proprietor or firm | The company pays 5% under reverse charge, unless you charge 18% | 1 Nov 2026 | Covers renting (the car at the company's disposal), not per-trip transport. Began 1 Oct 2019; until 31 Oct 2026 the test was 'unless you charge 12%'. |
| Tolls, parking, permit tax on your bill | Usually GST at the trip's rate (our reading) | 1 Jul 2017 | Out only if you are the customer's pure agent. See the charges table. |
| Toll and parking you pay | Toll: no GST. Private parking: 18% | 1 Jul 2017 | Parking GST is claimable only on the 18% option. |
| Self-drive car (no driver) | Same rate as selling that car: 18% or 40%, 5% for electric | 22 Sep 2025 | Same-as-the-car rule since 1 Oct 2019; it was 28% for cars until 21 Sep 2025. |
Current, upcoming and expired rules
Current is what applies today. Upcoming is notified and starts later. Expired shows what applied before, from which date to which date, for when an old invoice or a notice asks.
Rules as on 31 Oct 2026 (India time). A rule moves between the tabs on its own when its start or end date passes.
| Rule | Rate | Dates | Law and source |
|---|---|---|---|
| Road tax, insurance and FASTag recovered on a vehicle lease are part of its valueWhen a lessor recovers registration charges (including road tax), insurance, FASTag charges and other incidental expenses from the lessee on top of the lease rent, they form part of the value of the leasing service and are taxed at the leasing rate. | — | Since 28 Oct 2026 | Circular 266/12/2026-GST, para 4 Checked against the textCircular 266/12/2026-GST, para 4 (CBIC) |
| Cab hire at 18% with full creditThe full-credit option is now 18%. The 12% rate no longer exists for cab hire. The 5% option is unchanged.Credit (ITC): Full credit.For a cab operator: A cab-hire invoice at 12% dated after 21 Sep 2025 has the wrong rate. | 18%Code 996412 / 996601 | Since 22 Sep 2025 | 15/2025-CT(Rate), S.No. 8(vi), 10(i): 6% CGST replaced by 9% Checked against the textNotification 15/2025-CT(Rate) |
| Self-drive rental at 18% or 40%Still the vehicle's own rate: 18% for small cars, 40% for other cars, SUVs and MUVs, 5% for electric vehicles. No cess. | 18% / 40% (EV 5%)Code 997311 | Since 22 Sep 2025 | 11/2017-CT(Rate) S.No. 17 read with 9/2025-CT(Rate) Checked against the text56th GST Council FAQs |
| Cab hire at 5%, with credit on hire from other operators capped at 5%The 5% option continues. Credit on hire bought from other operators is capped at 5% of its value: if the other operator charged more, the extra is your cost. The government's example: a cab hired at ₹800 from an operator charging 6% CGST gives credit of ₹20, not ₹48.Credit (ITC): Only on hire bought from other operators, capped at 5% of its value.For a cab operator: A partner who bills you at 18% costs you an extra 13% of the hire value compared with one who bills you at 5%, because you can claim only 5%. | 5%Code 996412 / 996601 | Since 20 Oct 2023 | 12/2023-CT(Rate), further proviso in S.No. 8(vi), 10(i) Checked against the textNotification 12/2023-CT(Rate) |
| Reverse charge unless the supplier charges 12%Renting a passenger vehicle with fuel to a body corporate, by any supplier that is not a body corporate (a proprietor, HUF, firm, trust or society), is under reverse charge unless the supplier's invoice charges 12% (6% CGST). The company pays 5% and the supplier charges none. CBIC said this wording also explains the earlier period.Our reading: From 22 Sep 2025 the with-credit rate was 18%, but this entry still said 12% until 31 Oct 2026. Read literally, an 18% bill from a proprietor or firm was still under reverse charge, so the company could be asked to pay again. That looks unintended to us, since 18% replaced 12% as the with-credit option, but the entry was corrected only from 1 Nov 2026. If you have such bills, ask your CA. | 5%, paid by the company | 31 Dec 2019 – 31 Oct 2026 | 29/2019-CT(Rate), substituting S.No. 15 of 13/2017-CT(Rate); Circular 130/49/2019-GST Checked against the textNotification 29/2019-CT(Rate)Circular 130/49/2019-GST |
| Reverse charge on unregistered purchases only in notified casesBuying from an unregistered person triggers this reverse charge only for categories the government notifies, such as some real-estate purchases. Cab hire to companies is a separate reverse-charge entry and still applies. | — | Since 1 Feb 2019 | CGST Act s.9(4) as substituted from 1 Feb 2019 Checked against the textCGST Act s.9 (CBIC) |
| Small operators with inter-state services need not registerA business supplying services across states need not register if its all-India turnover is up to ₹20 lakh a year (₹10 lakh in special category states). | — | Since 13 Oct 2017 | 10/2017-Integrated Tax Matched across published copiesNotification 10/2017-Integrated Tax (GSTGyaan) |
| Cab hire where the customer pays for fuel separatelyIf fuel is not part of your price, the 5% entries do not apply. The trip or rental falls in the general entries at 18% with full credit.Credit (ITC): Full credit. | 18%Code 996412 / 996601 | Since 1 Jul 2017 | 11/2017-CT(Rate) S.No. 8(vii), 10(ii) (later 10(iii)) Checked against the textNotification 11/2017-CT(Rate) |
| Toll paid at a toll plaza carries no GSTAccess to a road or bridge on payment of toll is exempt, so the toll plaza charges no GST and there is no credit to claim on it. | ExemptCode 996742 | Since 1 Jul 2017 | 12/2017-CT(Rate) entry 23 Checked against the textNotification 12/2017-CT(Rate) |
| Paid parking at private lots: 18%Parking falls under supporting services in transport at 18%. Parking run by a municipality itself as one of its functions is exempt.Credit (ITC): On the 18% option, claimable for business parking billed in your GSTIN. On the 5% option, a cost. | 18%Code 996743 | Since 1 Jul 2017 | 11/2017-CT(Rate) S.No. 11 (heading 9967); 12/2017-CT(Rate) entry 4 Checked against the textNotification 11/2017-CT(Rate)Notification 12/2017-CT(Rate) |
| Tolls and parking you recover from the customer are part of the GST valueWhat you charge the customer for tolls, parking and permits for your own vehicle goes into the value of the trip and carries the trip's GST rate. It stays out only if you are the customer's pure agent under Rule 33: under a contract with the customer and on its authority, with no title to what you paid for and no use of it for your own interest, billed at actual cost on a separate line.Our reading: No CBIC circular deals with tolls on cab bills as such. The nearest is Circular 266/12/2026: for vehicle leasing, recoveries of road tax, insurance and FASTag charges are part of the lease value. An advance ruling, which binds only the applicant, held tolls to be part of the value: Tamil Nadu AAR 24/AAR/2022, for a company renting buses and cars with drivers for employee transport. | Trip's rate | Since 1 Jul 2017 | CGST Act s.15(2)(a), (c); CGST Rules, Rule 33 Checked against the textCGST Act s.15 (CBIC)CGST Rules, Rule 33 (CBIC)Tamil Nadu AAR 24/AAR/2022, NTL India (GST Council)Circular 266/12/2026-GST, para 4 (CBIC) |
| Place of supply for a tripFor a GST-registered customer, the place of supply is the customer's registered location. For anyone else, it is where the passenger gets in for a continuous journey. A return trip counts as a separate journey. | — | Since 1 Jul 2017 | IGST Act s.12(9) Checked against the textIGST Act s.12 (CBIC) |
| Place of supply for renting a vehicleFor a GST-registered customer, the customer's location. For anyone else, the customer's address on your records, or your own location if you have none. | — | Since 1 Jul 2017 | IGST Act s.12(2) Checked against the textIGST Act s.12 (CBIC) |
Checked against the government text Official copy not yet online; matched across published copies The law is unclear; this is our reading
On a timeline
Each line is one rule; each bar is one period. Grey has ended, green applies today, amber starts later.
Who can claim GST credit
Input tax credit (ITC) is GST you paid on a purchase that you subtract from the GST you collect. Whether you get it depends on who you are and what you bought.
| Who | Buys | Can claim? | Condition |
|---|---|---|---|
| Cab operator on the 5% option | Cab or bus hire bought from another operator for your own customer | Yes, up to 5% | This is the one credit the 5% option allows. Since 20 Oct 2023 it is capped at 5% of the hire value: if the other operator charged 12% or 18%, the extra is your cost. From 13 Oct 2017 to 19 Oct 2023 there was no cap; before 13 Oct 2017 the 5% option allowed no credit at all. Electric-cab entries from 1 Nov 2026 have the same 5% cap.11/2017-CT(Rate) S.No. 8(vi), 10(i); 31/2017, 12/2023, 06/2026-CT(Rate) |
| Cab operator on the 5% option | Cars, servicing, tyres, insurance, software, office rent | No | The 5% option allows no credit except on hire bought from other operators.11/2017-CT(Rate) S.No. 8(vi), 10(i) |
| Cab operator on the 18% option | Cars and buses used to carry passengers | YesOur reading | The vehicle must be used to carry passengers in the business; a car kept for the owner's own use stays blocked. A 2019 West Bengal advance ruling refused this credit on cars given on monthly rental with driver, calling it renting, not passenger transport.CGST Act s.17(5)(a); WB AAR 08/WBAAR/2019-20 |
| Cab operator on the 18% option | Servicing, repairs and insurance of those vehicles, software, office rent | Yes | Used for the business. For servicing and insurance, the vehicle itself must qualify.CGST Act s.16, s.17(5)(ab) |
| Any operator | Diesel, petrol or CNG | No | These fuels are outside GST, so the bill carries no GST to claim.CGST Act s.9(2) |
| Any operator | Toll paid at a toll plaza | Nothing to claim | Access to a road or bridge on payment of toll is exempt from GST, so the toll receipt carries no GST.12/2017-CT(Rate) entry 23 |
| Cab operator on the 18% option | Paid parking at a private lot, mall or airport | Yes | Private parking carries 18% GST, which you can claim when it is for your business and the bill shows your GSTIN. On the 5% option it is a cost. Parking run by a municipality itself is exempt, so there is nothing to claim.11/2017-CT(Rate) S.No. 11 (heading 9967); 12/2017-CT(Rate) entry 4 |
| A company that is not in the travel trade | Cars of up to 13 seats hired with driver for staff or guests | No | Blocked. It is allowed only if a law makes the employer provide the transport, or the company uses the hire to supply the same kind of service or as part of a taxable composite or mixed supply. Example of the first: Tamil Nadu makes employers provide transport for women staff working between 8 pm and 6 am, and two Tamil Nadu advance rulings allowed credit for those trips only, from 28 May 2019.CGST Act s.17(5)(b)(i) and provisos; Circular 172/04/2022-GST; TN AAR 14/ARA/2023, 18/ARA/2026 |
| A company that is not in the travel trade | A bus or tempo traveller of more than 13 seats hired for business use | Usually yes | Vehicles of more than 13 seats are outside the blocked list since 1 Feb 2019, and advance rulings in Maharashtra, Gujarat and Haryana allowed this credit. The hire must be for the business. Where staff pay part of the cost, credit is limited to the employer's share.CGST Act s.16, s.17(5)(b)(i); Maharashtra AAR (Tata Motors, 2020); Gujarat AAR (Emcure, 2022); Haryana AAAR (YKK India, 2019) |
| Another cab operator buying from you | Your cab hire, to serve its own customer | Yes | It is in the same line of business, so it can claim the GST on your bill: in full if it is on the 18% option, and only up to 5% of the hire value if it is on the 5% option.CGST Act s.17(5)(b)(i) proviso; 11/2017-CT(Rate) S.No. 8(vi), 10(i); 12/2023-CT(Rate) |
| An event company | Cab hire used to deliver an event it bills for | Yes | Allowed when the hire is part of a taxable composite or mixed supply the company makes.CGST Act s.17(5)(b)(i) proviso |
Tolls, cancellations, interest and other charges: GST or not?
Most extra lines on a bill take the same GST rate as the trip. The exceptions are below: a discount on the invoice, a fine for a bounced cheque, penalties that only make good a loss, and costs you pay purely as the customer’s agent.
| Charge | GST? | Why |
|---|---|---|
| Any incidental expense you charge the customer | Yes, at the trip's rateOur reading | The law puts 'incidental expenses … charged by the supplier to the recipient' and any amount charged for anything done in respect of the supply into the value of supply. So an extra that is part of the trip takes the trip's rate, unless it is a genuine pure-agent expense (last row). A separate service you sell at its own price follows its own rate.CGST Act s.15(2)(c) |
| Toll charges you recover from the customer | Usually yes, at the trip's rateOur reading | Your vehicle uses the road, so the toll is a cost of doing your trip, and incidental expenses you charge the customer are part of the GST value. In 2022 the Tamil Nadu advance ruling authority held this for a company renting buses and cars with drivers (NTL India), and CBIC's Circular 266/12/2026 says the same of FASTag charges recovered on a vehicle lease. Tolls stay out only if you are genuinely the customer's pure agent (see the last row), which is hard to show for your own vehicle.CGST Act s.15(2)(a), (c); Rule 33; TN AAR 24/AAR/2022 (NTL India); Circular 266/12/2026-GST para 4 |
| Parking charges you recover from the customer | Usually yes, at the trip's rateOur reading | Same reasoning as tolls: parking your own vehicle is part of your cost of the trip.CGST Act s.15(2)(a), (c); Rule 33 |
| State or interstate permit tax, border or entry tax | Yes, at the trip's rate | A tax or fee under another law that you charge separately is included in the value on which GST is worked out.CGST Act s.15(2)(a) |
| Driver allowance, night charges, extra km, extra hours, waiting | Yes, at the trip's rate | They are part of the price of the same trip.CGST Act s.15(1), 15(2)(c) |
| Driver's food and stay recovered from the customer | Usually yes, at the trip's rateOur reading | Part of your cost of the trip, unless every pure-agent condition is met.CGST Act s.15(2)(c); Rule 33 |
| Fuel surcharge or fuel price adjustment | Yes, at the trip's rate | It is part of the price, even though fuel itself is outside GST.CGST Act s.15(1) |
| Cancellation charges | Yes, at the trip's rate | CBIC treats a cancellation charge, or the part of an advance or deposit you keep, as part of the same service, taxed at its rate. If the main service is exempt, so is the charge.Circular 178/10/2022-GST paras 7.1.6, 11 |
| Advance received before the trip | Yes, in the month you receive it | For services, GST is due on the earlier of the invoice (if issued within 30 days of the service) and the payment, so an advance carries GST when it arrives. Issue a receipt voucher; if the trip never happens, a refund voucher reverses it.CGST Act s.13(2), s.31(3)(d), (e); rules 50, 51 |
| Interest or late fee you charge for late payment | Yes, at the trip's rate | Interest, a late fee or a penalty for late payment of your bill is part of its value, so it takes the trip's rate. CBIC calls it an ancillary supply that goes with the main one.CGST Act s.15(2)(d); Circular 178/10/2022-GST para 9 |
| Charge for a bounced cheque | No GST | A fine for a dishonoured cheque is not payment for any service, so it carries no GST.Circular 178/10/2022-GST para 7.3 |
| Penalty a customer deducts for a late cab | No GST on it for the customerOur reading | CBIC treats such penalties as compensation, not payment for a supply, so the customer charges no GST on them. Whether you can reduce your own bill by a credit note is not settled.Circular 178/10/2022-GST paras 7.1.3-7.1.4; CGST Act s.34(1) |
| Discount shown on the invoice | No GST on the discount | GST is charged on the price after a discount shown on the invoice itself.CGST Act s.15(3)(a) |
| Discount given later by credit note | Only with a GST credit note | A later discount cuts your GST only through a GST credit note, and only once the customer has reversed the matching credit. Until 31 October 2026 the discount also had to be agreed before the supply and linked to the invoices. A commercial credit note without GST is allowed, but it does not cut your GST.CGST Act s.15(3)(b), s.34(2); 03/2026-CT; Circulars 92/11/2019, 251/08/2025 |
| An expense you pay as the customer's pure agent | Not taxable if every condition is met | Under a contract to act as the customer's pure agent, you paid it on the customer's authority, you hold no title to what you bought and do not use it for your own interest, it is in addition to your own service, and you bill it at actual cost on a separate line. Example: entry tickets bought for a guest on its instruction.CGST Rules, Rule 33 |
What courts and rulings have said
Judgments and advance rulings that explain a rule, including ones that pull in different directions. Weigh them by who gave them: a Supreme Court judgment binds every court in India; a High Court’s is followed by courts and tax officers in its State and is persuasive elsewhere; an advance ruling (AAR or AAAR) binds only the business that asked for it and its tax officer (section 103 of the CGST Act).
| Ruling | Question and answer | Weight |
|---|---|---|
| High CourtCommissioner of Income Tax-XII v. Gurpreet Singh (proprietor, Harmony Travels)Delhi High Court, 9 Oct 2013ITA 463/2013 | Must a travel operator who hires cars and taxis from owners, but pays the drivers and fuel itself, deduct TDS under s.194C(2) on the hire paid?No. Section 194C(2) needs a contract for work with labour, such as carriage of passengers; taking a vehicle without driver and fuel is not covered. The Revenue's appeal was dismissed at the threshold because the Tribunal had found as a fact that the operator paid fuel and drivers.“Taking a vehicle/taxi, without driver and fuel is not covered.”Income-tax Act 1961 s.194C(2) and Explanation (work includes carriage of passengers), s.40(a)(ia); s.194-IDelhi High Court order | Turns on its factsIncome-tax authorities and the Tribunal in Delhi; persuasive elsewhereNone known. Decided under the 1961 Act on section 194C only; it does not say whether section 194-I applies instead. |
| High CourtCommissioner of Income Tax v. BMR & AssociatesDelhi High Court, 12 Apr 2010ITA 619/2010 (2010:DHC:1979-DB) | Are car lease rentals paid to a leasing company that supplies no driver and no maintenance a transport contract needing TDS under s.194C?No. The lessor neither provided drivers, nor maintained the cars, nor carried passengers, so it was a lease of vehicles for a fixed period, not a contract for carriage under s.194C. The Revenue's appeal was dismissed.“the contract was not a transport contract, but merely entailed the taking of vehicles on lease and the payments were in the nature of lease rentals simplicitor”Income-tax Act 1961 s.194C (Explanation III(c), carriage of passengers), s.194-I, s.40(a)(ia)Delhi High Court judgment | Turns on its factsIncome-tax authorities and the Tribunal in Delhi; persuasive elsewhereNone known. Decided under the 1961 Act on section 194C only; it does not say whether section 194-I applies instead. |
| AAARM/s Ion Trading India Private LimitedUttar Pradesh AAAR, 16 Mar 2020Order No. 11/AAAR/16/03/2020 (appeal against AAR Order No. 42 dated 27-09-2019) | When a company rents parking spaces and recovers exactly the same amount from the employees who use them, is that taxable and at what value?It is a supply of service, but its value is nil if the company meets the pure-agent conditions of Rule 33: it acts on the employees' authorisation, does not use the spaces for itself, and passes on exactly what it pays. Not a travel case, but it shows when a recovered expense can stay out of the taxable value.“the value of the services in the present case will be NIL, as the appellant is providing the same in the capacity of a Pure Agent”CGST Rules r.33 (pure agent); CGST Act s.7(1), s.15AAAR order PDF, scanned (GST Council)Patron Accounting summary (secondary) | Turns on its factsOnly the applicant and its jurisdictional tax officers (CGST Act s.103); persuasive elsewhereNone known. Contrast the Tamil Nadu AAR in NTL India (2022): tolls a vehicle-rental firm recovered were part of the value. |
| AAARM/s YKK India Pvt Ltd, Bawal, Rewari (appellant)Haryana AAAR, Jun 2019HAR/AAAR/2018-19/03 (appeal against Haryana AAR ruling HAR/HAAR/R/2018-19/04 dated 11-07-2018) | Can a factory claim ITC on GST charged for hiring buses and cars, with drivers, to bring employees to work?Buses with more than 13 approved seats: yes, after the 2018 amendment; before it, no. Cars and vehicles of up to 13 seats: no ITC before or after the amendment, because the rent-a-cab and vehicle-hire block applies. This modified the Haryana AAR ruling of 11-07-2018, which had refused ITC on both.“the appellant is eligible to input tax credit of the GST charged by the Contractor for hiring of buses only having approved seating capacity of more than thirteen persons”CGST Act s.17(5)(a) and s.17(5)(b)(i) (from 01-02-2019); old s.17(5)(b)(iii) 'rent-a-cab'Haryana AAAR order, official PDF (GST Council)GST Council listing page for the order | ClarifiesOnly YKK India and its jurisdictional tax officers (s.103).No further challenge found. The order dates the change from 30 Aug 2018, when the amending Act was published, but the new section 17(5) took effect on 1 Feb 2019, so rely on that date. |
| AARM/s AGS Health Pvt Ltd, Chennai (applicant)Tamil Nadu AAR, 4 Mar 2026Advance Ruling No. 18/ARA/2026 | Can an IT-enabled services company claim ITC on vehicles leased for staff transport in all shifts, going back to 01-02-2019?Only for vehicles carrying women employees who arrive or leave between 8 pm and 6 am, which Tamil Nadu law (government order no. 60 of 28-05-2019 under the Shops and Establishments Act) makes obligatory; not for other shifts or staff. ITC runs from 28-05-2019. The s.16(4) time limit still applies, so credit for past periods that has lapsed cannot be revived.“only on the tax paid on services of leasing, renting or hiring of motor vehicles for providing transport facilities to women employees”CGST Act s.17(5)(b) proviso; Circular 172/04/2022-GST; s.16(4)TN AAR ruling, official scanned PDF (GST Council)Patron Accounting summary (secondary) | Turns on its factsOnly the applicant and its jurisdictional tax officers (s.103).Same view as the Tamil Nadu AAR in Access Healthcare Services (2023). No appeal known. |
| AARM/s Juspay Technologies Pvt. Ltd. (Namma Yatri app)Karnataka AAR, 15 Sep 2023Advance Ruling No. KAR ADRG 31/2023 | Is a subscription-only ride app (no commission; auto drivers paid directly by riders) liable to pay GST on the rides under s.9(5)?No. The app is an e-commerce operator and an auto-rickshaw is a 'motorcab', but the rides are not supplied 'through' the app: it only connects driver and rider, does not collect fares and has no control over the ride. So it need not collect or pay GST on the rides.“merely connects the auto driver and passenger and their role ends on such connection”CGST Act s.9(5), s.104; Notif. 17/2017-CT(Rate)Ruling PDF, scanned (GST Council)GST Council AAR listing entryInc42 on the High Court stay of the AAR notice (secondary)Taxo on the AAR notice (secondary) | Rulings differOnly the applicant and its jurisdictional tax officers (CGST Act s.103); persuasive elsewhereConflicts with the same authority's Opta Cabs ruling (2018). On 19 Jun 2025 the authority issued notice proposing to declare this ruling void; the Karnataka High Court reportedly stayed that notice (order not seen). |
| AARM/s Access Healthcare Services Pvt Ltd, Chennai (applicant)Tamil Nadu AAR, 15 Jun 2023Advance Ruling No. 14/ARA/2023 | Can a company claim ITC on cabs of under 13 seats hired to carry women staff at night, where state law makes that transport compulsory?Yes, but only for women employees arriving at or leaving work between 8 pm and 6 am, because the Tamil Nadu Shops and Establishments Act notification of 28-05-2019 makes that transport obligatory. ITC runs from 28-05-2019, not 01-02-2019, subject to the s.16 conditions. Transport for other staff stays blocked.“ITC is not blocked on the renting of motor vehicles to provide transport facilities to women employees working between 8.00 PM to 6.00 AM”CGST Act s.17(5)(b)(i) and proviso; Circular 172/04/2022-GST; Tamil Nadu Shops and Establishments Act 1947, notification dated 28-05-2019TN AAR ruling, official scanned PDF (GST Council)GST Council listing page | Turns on its factsOnly the applicant and its jurisdictional tax officers (s.103).No appeal found. The Tamil Nadu AAR took the same view in AGS Health (2026). |
| AARM/s Uttarakhand Public Financial Strengthening Project (recipient of motor vehicle hire from M/s Baba Tour & Travel and M/s Rajeshwari Travel)Uttarakhand AAR, 27 Mar 2023Advance Ruling No. 15/2022-23 (Application No. 11/2022-23) | When a monthly vehicle-hire contract bills a monthly rent plus night charges plus fuel by kilometres, is GST due on the whole bill or only on the monthly rent?GST is due on the whole bill: monthly rental plus night charges plus fuel on a mileage basis. The operator had to arrange fuel and maintenance, so any amount recovered under any head is extra consideration for the hire service under s.15.“Service provider has to charge GST on the whole amount of bill”CGST Act s.15(1)-(2); Notif. 11/2017-CT(Rate) S.No. 10(i)Ruling PDF (copy hosted by LiveLaw)LiveLaw Biz report (secondary) | ClarifiesOnly the applicant and its jurisdictional tax officers (CGST Act s.103); persuasive elsewhereNone known. |
| AARNTL India Private LimitedTamil Nadu AAR, 30 Jun 2022Order No. 24/AAR/2022 | Must a company renting buses and cars with drivers (employee transport for clients such as Cognizant and India Yamaha) include toll charges it pays and recovers at actuals in its taxable value?Yes. Tolls are a cost the operator incurs so its own vehicles can run the service it sold, so their recovery is a reimbursement, not a pure-agent disbursement, and GST is payable on the whole value including tolls. The question whether the toll exemption passes to the operator was not admitted, as the operator is only a recipient of the toll service.“Reimbursement of such cost is no disbursement, but merely the recovery of a portion of the value of supply made to the recipients”CGST Act s.15(2)(c) (incidental expenses); CGST Rules r.33 (pure agent); Notif. 12/2017-CT(Rate) S.No. 23 (toll exemption)Ruling PDF, scanned (GST Council)GST Council AAR listing entryLiveLaw report (secondary) | ClarifiesOnly the applicant and its jurisdictional tax officers (CGST Act s.103); persuasive elsewhereNone known. Contrast the Uttar Pradesh AAAR in Ion Trading (2020), where a cost passed on purely as the employees' agent had nil value; there the employees alone used the parking. |
| AARM/s New Pandian Travels Pvt Ltd, Chennai (applicant)Tamil Nadu AAR, 30 Nov 2021Order No. 43/AAR/2021 | Can a travel company claim ITC on cars of up to 13 seats that it rents with drivers to corporate clients, including SEZ units?No. Renting cars with drivers is neither a 'further supply of such motor vehicles' nor 'transportation of passengers', because the client's own transport team decides routes, pick-up points and who travels. The same applies to supplies to SEZ units under LUT.“the activity undertaken by the applicant is only renting/hiring of the Motor Vehicles with the operators and not undertaking transportation of passengers”CGST Act s.17(5)(a)(A) and (B); IGST Act s.16TN AAR ruling, official PDF (GST Council) | ClarifiesOnly the applicant and its jurisdictional tax officers (s.103).No appeal found. Same view as West Bengal AAR, Reesham Associates (2019). |
| AARMohana Ghosh, carrying on business under the trade name M/s Reesham AssociatesWest Bengal AAR, 25 Jun 201906/WBAAR/2019-20 dated 10-06-2019, rectified suo motu by 08/WBAAR/2019-20 dated 25-06-2019 (case WBAAR 09 of 2019, applied 28-03-2019) | Is renting cabs with drivers to institutions such as the West Bengal Postal Circle, billed for a fixed number of hours a month, passenger transport (SAC 9964) or renting of a motor vehicle (SAC 9966), and can GST paid on buying the cars be claimed as ITC?It is renting of a motor vehicle (SAC 9966), not passenger transport: the customer pays a fixed monthly amount for the right to use the car whether or not it moves, extra for holidays or extra hours, and kilometres count only to recover fuel. Because the supply is not transportation of passengers, GST paid on buying the cars is not available as ITC under s.17(5)(a).“the recipient is provided with the right to use the vehicle over a specified duration, whether he is a passenger or not”Notif. 11/2017-CT(Rate) S.No. 8 (heading 9964) and S.No. 10(i) (heading 9966); CGST Act s.17(5)(a) and (b)(i) as amended w.e.f. 01-02-2019Rectified ruling 08/WBAAR/2019-20 (GST Council)Original ruling 06/WBAAR/2019-20 (WB Commercial Taxes)StudyCafe report (secondary; quotes 'WBAAR 09 of 2019', which is the case number) | ClarifiesOnly the applicant and its jurisdictional tax officers (CGST Act s.103); persuasive elsewhereNo appeal found. The authority corrected its own order on 25 Jun 2019, and some reports still quote the first version. The Tamil Nadu AAR took the same line in New Pandian Travels (2021); we found no ruling allowing this credit. |
| AARM/s Opta Cabs Private LimitedKarnataka AAR, 27 Jul 2018Advance Ruling No. KAR ADRG 14/2018 | If a taxi app charges drivers only a monthly usage fee, takes no commission, and riders pay drivers directly, must the app still pay GST on the rides under s.9(5)?Yes. The passenger transport is supplied to customers through the app, so the app is deemed the supplier and must pay GST on the amounts it bills on behalf of the taxi operators.“There is no doubt that the services of transportation of passengers is supplied to the consumers through the applicant”CGST Act s.9(5); Notif. 17/2017-CT(Rate) dated 28-06-2017Ruling PDF (GST Council) | Rulings differOnly the applicant and its jurisdictional tax officers (CGST Act s.103); persuasive elsewhereConflicts with the same authority's ruling for Juspay (Namma Yatri) in 2023, on a subscription app. |
SAC and HSN codes
The code you print on the invoice: SAC for a service, HSN for goods. Since 1 April 2021 an invoice must show at least 4 digits if last year’s turnover was up to ₹5 crore, and 6 digits above that. Descriptions follow the government’s classification of services.
| Code | What it is for | Covers | GST today |
|---|---|---|---|
| 996412SAC | Taxi and chauffeur-driven car hire, local | City trips, airport transfers, radio taxis, car-pooling | 5% or 18% |
| 996423SAC | Taxi between cities | Outstation trips by taxi | 5% or 18% |
| 996601SAC | Renting a car, bus or coach with driver | Car or bus at the customer's disposal for a period; the customer decides routes and timings | 5% or 18% |
| 997311SAC | Self-drive car rental | Car or other transport vehicle rented without a driver | Same as selling the car: 5%, 18% or 40% |
| 996742SAC | Toll roads and bridges | What the toll plaza supplies | Exempt (12/2017 entry 23) |
| 996743SAC | Parking lots | Paid parking | 18% at private lots; exempt if run by the municipality itself |
| 8703HSN | Cars, SUVs and MUVs | Vehicles for fewer than 10 people including the driver | 18% small, 40% others, 5% electric |
| 998551SAC | Booking tickets and rental cars | Agent's service for air, rail, bus tickets and car rentals | 18% on the agent's fee |
Which option suits you
Both options apply to the same service: a car with a driver, where fuel is part of your price. It does not matter whether you bill per trip, per day or per month. If the customer pays for fuel separately, neither option applies and the rate is 18%.
- 5%: lower price for the customer. You get credit only on cab hire you buy from other operators.
- 18%: you get credit on almost everything you buy for the business, including the GST on a new car.
You bill a company ₹2,00,000 for the month. Your bills that carry GST: ₹60,000 of cab hire from other operators at 5% (₹3,000 GST), ₹20,000 of servicing and tyres at 18% (₹3,600) and ₹5,000 of software at 18% (₹900).
| At 5% | At 18% | |
|---|---|---|
| GST on your invoice | ₹10,000 | ₹36,000 |
| Credit on cab hire bought in | ₹3,000 | ₹3,000 |
| Credit on servicing, tyres, software | ₹0 | ₹4,500 |
| GST you pay in cash | ₹7,000 | ₹28,500 |
| Your customer pays in total | ₹2,10,000 | ₹2,36,000 |
18% pays off mainly in a year when you buy several cars, and only if your customers can use the credit. Most companies cannot, as the next section explains.
Can your customer use the GST you charge?
Usually not. A company hiring cars of up to 13 seats for its staff cannot claim that GST (section 17(5) of the CGST Act). So for most company customers, GST is a real cost: on a ₹10,000 trip they pay ₹11,800 at 18% against ₹10,500 at 5%, about 12.4% more.
Two exceptions:
- Another operator buying from you is in the same line of business, so it can claim it: in full if it is on the 18% option, and only up to 5% of the hire value if it is on the 5% option.
- A bus or tempo traveller with more than 13 seats is outside the block, so a company hiring one for its business can usually claim it.
The full list is in the table above, “Who can claim GST credit”.
5% for one customer, 18% for another?
On the text, yes. The cab-hire entries (Notification 11/2017, S.No. 8(vi) and 10(i)) give the same service two rates, 5% or 18%, and say nothing about choosing once a year or for all customers. Compare goods transport agencies: in 2017 their entry said an agency choosing the higher rate “shall, thenceforth, be liable to pay central tax @ 6% on all the services of GTA supplied by it”. The cab-hire entries never had such a line, and the 2025 change (Notification 15/2025) only replaced 12% with 18%. No circular deals with the point, so this is our reading.
The catch is credit. The 5% rate holds only if you have not taken credit on the goods and services used for those trips, apart from cab hire bought from other operators (up to 5%). If one car serves both, the notification itself says how to split the credit on it, its servicing and its tyres: reverse the share used for the 5% trips “as if supply of such service is an exempt supply”, which brings in section 17(2) and rules 42 and 43 (Explanation (iv) to Notification 11/2017). Keep records that tie each cost to the work it serves, and take advice before you start.
You rent cars at ₹50,000 a month to Company A at 18% and to Agency B at 5%.
| Company A (18%) | Agency B (5%) | |
|---|---|---|
| GST on your bill | ₹9,000 | ₹2,500 |
| Credit on the cars and costs used for it | Yes | No |
| Credit on cab hire bought from other operators | Yes, in full | Up to 5% |
Shared costs, such as an office or booking software used for both, are split the same way, under rules 42 and 43, treating the 5% work as if it were exempt.
Same code or a different one? The code (SAC or HSN) does not fix the rate; the entry in the rate notification does. One code can carry two rates: cab hire (5% or 18%), or hotel rooms (5% up to ₹7,500 a night, 18% above). Different services on one bill, such as a chauffeur-driven car and a self-drive car, each take their own rate.
Reverse charge goes customer by customer too. A proprietor or firm renting cabs to companies can charge 18% to one company, and leave the GST to another company under reverse charge, on the same reading.
Buying cab hire from other operators
This is the one cost on which a 5% operator gets credit, and it is capped. Since 20 October 2023 (Notification 12/2023), you can claim at most 5% of the hire value. If your partner bills you 5%, you claim all of it. If your partner bills you 18% (12% before 22 September 2025), you still claim only 5%, and the rest is your cost.
- 1 Jul to 12 Oct 2017: the 5% option allowed no credit at all.
- 13 Oct 2017 to 19 Oct 2023: credit on hire from other operators, with no cap.
- From 20 Oct 2023: credit on hire from other operators, capped at 5%.
Partner operator B bills you ₹10,000 plus 18% (₹1,800) for a duty. You bill your own customer ₹12,000 plus 5% (₹600) for the same duty.
| Partner at 5% | Partner at 18% | |
|---|---|---|
| GST on B's bill | ₹500 | ₹1,800 |
| Credit you can claim (capped at 5%) | ₹500 | ₹500 |
| GST that becomes your cost | ₹0 | ₹1,300 |
| GST you collect from your customer | ₹600 | ₹600 |
| GST you pay in cash | ₹100 | ₹100 |
The government’s own example in Notification 12/2023: a cab hired at ₹800 from an operator charging 6% CGST gives credit of only ₹20 (2.5% of ₹800), not ₹48. So on the 5% option, partners who bill you at 5% cost you less.
If your partner is a proprietor or a partnership firm and you are a company, read reverse charge on cab hire first: on a 5% bill, the GST may be yours to pay.
Electric cabs from 1 November 2026
Until 31 October 2026 the 5% option spoke of “the cost of fuel” being in your price, and whether an electric car’s charging counts as fuel was never settled. That is our reading; for older EV invoices, ask your CA. From 1 November 2026 there are separate entries for electrically operated vehicles (Notification 06/2026): 5% when the cost of battery charging is in your price, or 18% with full credit.
The notification defines an electrically operated vehicle as one that runs solely on electrical energy (e-bicycles included). A hybrid is not one, so it stays under the ordinary cab-hire entries.
A ₹1,200 airport drop in an electric sedan, charging included in the fare.
| At 18% | At 5% (from 1 Nov 2026) | |
|---|---|---|
| Fare | ₹1,200 | ₹1,200 |
| GST | ₹216 | ₹60 |
| Customer pays | ₹1,416 | ₹1,260 |
IGST or CGST plus SGST?
For a customer registered under GST, the place of supply is the customer’s registered state, wherever the trip starts. For a customer who is not registered, a trip is supplied where the passenger gets in. Same state as yours: CGST plus SGST. Different state: IGST.
You are registered in Delhi. A car picks up at Delhi airport and drops in Gurugram for ₹3,000, on the 5% option.
| Customer registered in Delhi | Customer registered in Haryana | |
|---|---|---|
| Place of supply | Delhi | Haryana |
| CGST 2.5% | ₹75 | — |
| SGST 2.5% | ₹75 | — |
| IGST 5% | — | ₹150 |
| Total GST | ₹150 | ₹150 |
Tolls and parking: what you pay and what you bill
What you pay
- Toll at a plaza: no GST. Access to a road or bridge on payment of toll is exempt (Notification 12/2017, entry 23), so there is nothing to claim.
- Parking at a private lot, mall or airport: 18% GST. On the 18% option you can claim it for business parking billed in your GSTIN; on the 5% option it is a cost. Parking run by a municipality itself is exempt.
What you bill
Tolls, parking and permit tax you recover from the customer usually go into the value of the trip and carry the trip’s GST rate (our reading; see below). Section 15(2) of the CGST Act includes in the value any fee under another law that you charge separately, and incidental expenses you charge the customer.
They stay out only if you are the customer’s “pure agent” under Rule 33. All of these must hold: the customer authorised you to pay on its behalf, you hold no title to what you paid for and do not use it for your own interest, you recover only the actual amount, and it is shown separately on your invoice. For tolls and parking of your own vehicle the third test usually fails, because the road and the parking are used for your trip.
Our reading: no CBIC circular deals with tolls on cab bills as such. The nearest is Circular 266/12/2026 (28 October 2026): for vehicle leasing, recoveries of road tax, insurance and FASTag charges form part of the value of the leasing service. An advance ruling, which binds only the business that asked, points the same way: in NTL India (Tamil Nadu AAR 24/AAR/2022), a company renting buses and cars with drivers for employee transport had to include the tolls it recovered, as “incidental expenses incurred while providing outward supply”. Confirm your own arrangement with your CA.
Trip fare ₹8,000, tolls ₹600, interstate permit tax ₹1,000, on the 5% option.
| Fare | ₹8,000 |
| Tolls | ₹600 |
| Permit tax | ₹1,000 |
| Value for GST | ₹9,600 |
| GST at 5% | ₹480 |
| Invoice total | ₹10,080 |
Leaving the tolls and permit out would put GST of ₹80 at risk on this trip, with interest and penalty if a notice comes.
Common questions
Can I charge 5% to one customer and 18% to another?
On the text, yes: the cab-hire entries give both rates and, unlike the 2017 goods-transport entry, do not lock you into one rate for all customers. Credit on what you use only for the 5% trips cannot be taken, and credit on shared costs is split as if the 5% trips were exempt (rules 42 and 43). No circular deals with charging both rates; this is our reading, so confirm with your CA.
Can I still bill cab hire at 12%?
No. From 22 September 2025 the with-credit option is 18%. A cab-hire invoice at 12% dated after 21 September 2025 has the wrong rate.
On the 5% option, can I claim the GST on a new car?
No. The 5% option allows credit only on cab hire bought from other operators.
I bill at 5%. My partner operator charges me 12% or 18%. How much credit can I take?
Since 20 October 2023, only 5% of the hire value (Notification 12/2023). The rest of the GST on the partner's bill is your cost. From 13 October 2017 to 19 October 2023 you could claim the partner's full 12%. Before 13 October 2017 the 5% option allowed no credit at all.
Do I charge GST on tolls and parking I recover from the customer?
Usually yes, at the same rate as the trip (section 15(2) of the CGST Act). They are left out only if you are truly the customer's pure agent under Rule 33, which is hard to show for tolls on your own vehicle. The Tamil Nadu advance ruling in NTL India (24/AAR/2022) held tolls recovered by a company renting buses and cars with drivers to be part of the value, and CBIC's Circular 266/12/2026 says the same of FASTag charges recovered on a vehicle lease. This is our reading; confirm with your CA.
Is there GST on the toll I pay at the plaza, or on parking?
No GST on the toll: access to a road or bridge on payment of toll is exempt (Notification 12/2017, entry 23). Private parking carries 18%, which you can claim on the 18% option. Parking run by a municipality itself is exempt.
Is the interstate permit tax taxable?
Yes. A tax under another law that you charge separately on your bill is part of the value on which GST is charged (section 15(2)(a)).
Do I charge GST on driver allowance and night charges?
Yes, at the trip's rate. They are part of the price of the same trip.
Are cancellation charges taxable?
Yes, at the same rate as the trip. CBIC said so in Circular 178/10/2022.
Is the GST on an electric cab trip 5% now?
From 1 November 2026, yes, if charging is part of your price. Otherwise it is 18%.
Words used on this page
- GST option (5% or 18%)
- For cab hire with driver and fuel you choose 5% with almost no input credit, or 18% with full input credit. Until 21 Sep 2025 the second option was 12%.
- ITC (input tax credit)
- GST you paid on business purchases that you subtract from the GST you collect.
- Same line of business
- Buying the same kind of service you sell, such as cab hire bought from another operator.
- RCM (reverse charge)
- The customer pays the GST to the government instead of the supplier.
- Body corporate
- A company or an LLP. Proprietors, HUFs and partnership firms are not body corporates.
- SAC / HSN
- The code printed on an invoice for a service (SAC) or for goods (HSN).
- Place of supply
- The state whose GST applies. It decides whether you charge IGST or CGST plus SGST.
- E-invoice / IRN
- Reporting an invoice to the government portal, which returns an Invoice Reference Number and a QR code.
- Pure agent
- Someone who pays an expense on the customer's behalf, with its authority, and recovers it at actual cost.
- TDS
- Tax your customer cuts from a payment to you and deposits against your PAN. You claim it in your income tax return.
- TCS
- Tax a seller collects from the buyer on top of the price, such as on overseas tour packages.