The Central Government has amended the reverse charge mechanism (RCM) provisions governing the renting of passenger motor vehicles to body corporates, replacing the reference to 6% central tax with 9% central tax in the supplier-related condition.
The amendment has been introduced through Notification No. 08/2026–Central Tax (Rate), dated October 27, 2026, and will take effect on November 1, 2026.
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The notification modifies serial number 15 of Notification No. 13/2017–Central Tax (Rate), dated June 28, 2017, which identifies specified services on which the recipient is liable to pay central tax under reverse charge.
What Has Changed?
The notification substitutes the figure “6” with “9” in column (3) against serial number 15. This column specifies the supplier whose services fall within the relevant reverse charge entry.
The existing entry covers passenger motor vehicle rentals supplied by a person other than a body corporate to a body corporate, where fuel cost forms part of the consideration. Previously, the supplier-related condition referred to an invoice that did not charge central tax at 6%.
Following the amendment, the condition will instead refer to a supplier who does not issue an invoice charging central tax at 9% to the service recipient.
The change therefore revises the invoice-based condition used to determine whether the covered rental service attracts reverse charge.
Which Vehicle Rental Arrangements Are Covered?
Serial number 15 concerns the renting of motor vehicles designed to carry passengers where the cost of fuel is included in the amount charged to the recipient.
The entry applies where the supplier is a person other than a body corporate and the recipient is a body corporate located in the taxable territory. These features define the scope of the entry; the present notification changes only the percentage mentioned in the supplier column.
Accordingly, businesses must examine the nature of the rental arrangement, the supplier’s legal status, the recipient’s status and the tax charged on the invoice when determining whether this entry applies.
From November 1, 2026, the amended entry will use 9% CGST charged on the supplier’s invoice as the relevant reference point.
On a reading of the amended entry, a qualifying non-body corporate supplier issuing an invoice charging 9% central tax would fall outside the supplier description in serial number 15. Where the supplier does not issue such an invoice, the body corporate recipient would need to examine its reverse charge liability under the entry, subject to the remaining conditions being satisfied.
Companies procuring covered passenger vehicle rental services should therefore review their vendor arrangements and invoice treatment for supplies governed by the amended provision.
A key distinction is that Notification No. 08/2026 amends a condition in the reverse charge notification. It does not itself prescribe the tax rate payable under reverse charge.
The substitution of 6% with 9% should therefore be understood as a change to the supplier-invoice condition. The applicable rate on a particular supply must be determined under the relevant rate notification and its conditions.
Similarly, the figure of 9% in this notification refers specifically to central tax, rather than the combined GST levy.
The notification expressly provides that the amendment comes into force on November 1, 2026.
For affected businesses, the practical focus will be on checking whether suppliers are body corporates, whether fuel is included in the rental consideration, and whether invoices charge central tax at the percentage specified in the amended entry.
Businesses should also review their accounting treatment for transactions around the commencement date by applying the relevant statutory provisions. The notification does not contain a separate transitional procedure.
The Government has issued the amendment under Section 9(3) of the Central Goods and Services Tax Act, 2017, on the recommendations of the GST Council.
The operative change is narrowly framed: it replaces the figure in column (3) against serial number 15, without rewriting the service description or recipient category.
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