The Central Government has amended the reverse charge mechanism (RCM) provisions for renting passenger motor vehicles to body corporate recipients. Notification No. 08/2026-Central Tax (Rate), dated 27 October 2026, changes the tax-rate reference in the relevant supplier condition from 6% to 9%, effective from 1 November 2026.

1. What Has Changed?

The amendment substitutes the figure “6” with “9” against Serial No. 15 of Notification No. 13/2017-Central Tax (Rate), dated 28 June 2017, issued under Section 9(3) of the Central Goods and Services Tax Act, 2017.

The entry covers renting of motor vehicles designed to carry passengers, where fuel cost is included in the consideration, supplied by a person other than a body corporate to a body corporate.

Previously, the supplier condition referred to an invoice not charging central tax at 6%. From 1 November 2026, this reference changes to 9%.

2. Corresponding IGST Amendment

The corresponding amendment changes the figure “12” to “18” under the relevant entry of Notification No. 10/2017-Integrated Tax (Rate), dated 28 June 2017.

These figures refer to the central tax or integrated tax charged on the supplier’s invoice, as applicable. The amendment changes the condition used to determine RCM applicability; it does not independently prescribe a universal increase in the RCM rate for all vehicle rentals.

3. What Should Businesses Do?

From 1 November 2026, companies and vehicle rental providers should:

• Review supplier and recipient status.

• Check whether fuel cost is included in the rental consideration.

• Verify the GST rate charged on supplier invoices.

• Update vendor records and accounting systems to determine RCM applicability correctly.

Conclusion

The amendment aligns the invoice-rate threshold in the passenger vehicle rental RCM entry with the revised tax-rate framework. Businesses should review affected contracts and invoices before implementing the change.

For expert guidance on this topic, contact your tax professional today.