As per GST law, transport of passenger services are liable to GST in India. However, the Government has exempted certain services related to transport of passenger services vide notification number 12/2017- Central Tax (Rate) dated 28th June, 2017. In this post, we have discussed those passenger transportation services which are exempt from GST.
GST exemption for transport services in north-east states
Transport of passengers, with or without accompanied belongings, by air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal is exempt from GST.
Exemption to Contract carriage
Transport of passengers, with or without accompanied belongings, by non-air conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire is exempt from GST.
As per the GST notification, Contract carriage has the same meaning as assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988). Therefore, the relevant section 2(7) is important to understand the meaning of contract carriage.
As per section 2(7), contract carriage means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate or sum—
(a) on a time basis, whether or not with reference to any route or distance; or
(b) from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes—
(i) a maxi cab; and
(ii) a motor cab notwithstanding the separate fares are charged for its passengers;
Please note if such contract carriage is air conditioned, then exemption from GST is not applicable.
Applicable GST Exemption to stage carriage
Transport of passengers, with or without accompanied belongings, by stage carriage other than air-conditioned stage carriage is exempt from GST.
As per the notification, Stage carriage shall have the same meaning as assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988). As per section 2(40), Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey.
GST exemption applicable to Public transport services
Service of transportation of passengers, with or without accompanied belongings, by—
(a) railways in a class other than (i) first class; or (ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and
(e) metered cabs or auto rickshaws (including e-rickshaws).
is exempt from GST.
In order to avoid confusion, the Government has defined certain terms used for exemption from GST.
Metered cab means any contract carriage on which an automatic device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 (59 of 1988) and the rules made thereunder (but does not include radio taxi).
Radio taxi means a taxi including a radio cab, by whatever name is called, which is in two-way radio communication with a central control office and is enabled for tracking using the Global Positioning System or General Packet Radio Service.
State transport undertaking
State transport undertaking” has the same meaning as assigned to it in clause (42) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988). As per section 2(42), State transport undertaking means any undertaking providing road transport service, where such undertaking is carried on by,—
(i) the Central Government or a State Government;
(ii) any Road Transport Corporation established under section 3 of the Road Transport Corporations Act, 1950 (64 of 1950);
(iii) any municipality or any corporation or company owned or controlled by the Central Government or one or more State Governments, or by the Central Government and one or more State Governments.
(iv) Zila Parishad or any other similar local authority.
Explanation.—For the purposes of this clause, “road transport service” means a service of motor vehicles carrying passengers or goods or both by road for hire or reward.
e-rickshaw means a special purpose battery powered vehicle of power not exceeding 4000 watts, having three wheels for carrying goods or passengers, as the case may be, for hire or reward, manufactured, constructed or adapted, equipped and maintained in accordance with such specifications, as may be prescribed in this behalf.
Transport services to central government
Services provided to the Central Government, by way of transport of passengers with or without accompanied belongings, by air, embarking from or terminating at a regional connectivity scheme airport, against consideration in the form of viability gap funding is exempt from GST.
Provided that nothing contained in this entry shall apply on or after the expiry of a period of one year from the date of commencement of operations of the regional connectivity scheme airport as notified by the Ministry of Civil Aviation.