GST unfair on selfdrive rentals at 18%

GST regime has kicked in and I find it extremely unfair on self drive rental industry. While all transportation services are taxed at 5%, self drive alone is charged at massive 18%.

Refer this file (source India Today).
Why single out self drive customers? If I rent a car instead of buying one, I am contributing to avoid traffic congestion and saving environment. If more n more people avoid buying cars and use rental services, it is good for the city and government, as less expenditure is needed on infrastructure. But who will explain all these to government?
There're many stupid nuisances associated with this interpretation of GST w.r.t self drive rentals.

1. Not just rental amount, all associated services like pick-up/drop, airport convenience fee everything is charged at 18%, which I think is totally unfair. These services are same irrespective of customer pays for fuel or not, hence should be charged separately at 5%
2. Myles has a policy that if customer doesn't return the car with full tank fuel, they will fill up themselves and will charge customer cost of fuel + 50% surcharge. If I avail this route, will my 18% tax be refunded? (since I didn't pay directly on fuel, I only paid Myles for their services.

3. Zoomcar rental includes fuel. So technically fuel cost is NOT borne by the service recipient. Still they confirmed that they are charging 18%
Update: Zoomcar representatives have called and informed that it was a conscious decision to go for 18% in order to avail input tax credit. If they had not opted for this, then they would have had to pay close to 45% in taxes while buying the car plus each time a car is moved between states, tax has to be paid again. Zoomcar has absorbed most of tax burden-net difference in what customers pay before and after GST has been very minimal.

3 Even when I am not availing any goods or service in India, just simply booking something for outside India, I am still charged 18%. Refer below example of booking a Royal Brothers bike in Phuket, Thailand. I am not availing any goods or service in India. I am not paying for fuel cost in India. So why am I charged 18%? (Royal Brothers actually replied stating they are checking with their CA and for my booking they will bear the tax component while they get more clarity on the issue).10 days letter their website still puts tax at 18% for bookings in Thailand. This is double tax because local operator in Thailand would be paying 7% VAT to Thailand Government.
Extending this logic, if I book for a rental in India from abroad, I don't have to pay tax in India but only local tax where ever I am booking? 

Update: Royal Brothers has updated that they are working with relevant authorities to avoid double taxation and resolve this problem.

4. Revv Cars have two pricing models- including fuel, excluding fuel. But looks like they are charging same GST for both cases. Ideally tax should be 5% if fuel is not borne by the renter...
Not sure why government is thinking self drive is luxury. May be they want all of us to buy cars and clog the roads, instead encouraging those who are trying to manage without a car.

Technically speaking, even in regular taxi rental with driver customer pays for fuel. Driver almost often arrives with empty tank, as soon as the trip starts he goes to a petrol bunk to fuel up and asks customer to pay for fuel. This is their way of ensuring that some sort of advance payment is made. Don't you think this will qualify as "Fuel cost is borne by service recipient"? Even otherwise, doesn't customer always pay for fuel in any kind of motor vehicle hiring?

Customers will now think twice. May be renting a regular taxi would make the trip more economical or cut down on self drive trips/rent cheaper cars to save some money.

What are your thoughts?

Similar: Zoomcar vs Myles Vs Revv * Self drive cars in India- guide

4 comments:

  1. I am Brahmananda Reddy. Founder&CEO of Jagoo Riders(Bike rental in AP).Completely agreed with you. I am also talking same like this.

    ReplyDelete
  2. I Appreciate your efforts in your findings. we are also suffering not only as a consumer/customer but also as Self driver associate. In the month of July I was charged 18% GST on my revenue later from August I was charged 12% GST - still the revenue which was generated before GST implementation has drastically gone down. now we getting just 20-30% of the total revenue generated for the month.

    Technically speaking there should not be any GST on self drive rentals, it should be exempted from GST.

    ReplyDelete

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