Sir, what is the GST rate on transporation of passengers through road in AC buses and Non AC Buses? If a transporter has both, AC and Non AC buses, how to show the turnover in GST returns? Can we claim input tax of GST paid on purchase of AC buses , can we adjust the same against our output tax.? Is there any restrictions on claiming of input tax, in case of passenger transport service?'

Reply—

GST is not applicable on service of transportation of passengers through a non- air conditioned bus. Declare the receipts as exempted turnover in GST returns and receipts from transportation of passengers throgh air-conditioned bus needs to be declare as taxable outward supply in GST returns, rate of GST is 12%.

As per Section 17(2) of CGST Act, 2017, where input are used for both taxable as well as exempted goods, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies. The credit that is attributable to exempted supplies must be reversed.

In other words the total credit will be subject to pro-rata reversals i.e. reversal in proportion to value of non-taxable/ exemptsupplies. (see Rule 42 of the CGST Rules, 2017).

As you are engaged in both exempted as well as taxable supply under GST, you can only avail the proportional amount of ITC attributable to taxable supplies.

The portion of ITC pertaining to Exempted supplies is calculated by the following formula:

ITC pertaining to Exempted supply= Exempted turnover X Common credit / total turnover

The formula calculates the amount by the proportionate method. Such amount is deemed to be the amount of ITC pertaining to Exempted supplies and the assessee can not avail the benefit from it.