Vehicle Rental Under SAC Code 996601

Vehicle rental services cover renting cars, vans, buses, trucks and coaches to customers for self drive or with driver for a fixed period or distance. Operators provide vehicles, maintenance and basic support while customers use them for personal, business or logistics needs. Under GST, these vehicle rental services are classified under SAC 996601. This SAC code and its GST rate decide how GST is charged on rental invoices.

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996601 SAC Code GST Rate

Review old and new GST rates for Vehicle Rental under 996601 SAC Code.

Vehicle rental services under SAC 996601 are treated as rental services of transport vehicles under GST. Earlier, different tax treatments under service tax and VAT made it difficult to compare effective tax costs for rental versus own vehicles.

After the September 2025 rationalisation, most vehicle, boat and aircraft rental services under these codes generally fall in the 18 percent slab with input tax credit, as they are input intensive business services. In limited passenger transport linked cases, other specific treatments may apply based on the latest notifications.

The table below shows the latest standard GST rate for SAC code 996601 for typical rental services.

SAC Code

996601

Description

Rental services of road vehicles including buses, coaches, cars, trucks and other motor vehicles, with or without operator

New Rate

5% without ITC or 18% with ITC

Old Rate

5% without ITC or 12% with ITC

Notes

The 5% (same-line credit only) or 18% with ITC election applies to renting a motor vehicle or goods carriage with fuel included and, from 1 Nov 2026, to renting an electric vehicle (including e-bicycles) for passengers or goods with charging included. Other rentals with an operator are 18%, renting without an operator is taxed at the vehicle's own rate, and hiring a bus to a state transport undertaking or a goods vehicle to a GTA is Nil. From 1 Nov 2026, when a supplier other than a body corporate rents a passenger vehicle with fuel included to a body corporate, the body corporate pays the tax under reverse charge unless the supplier charges 18%. Source: Notification 11/2017-Central Tax (Rate), S. No. 10(i), 10(ia), 10(ib), 10(ic) and 10(iii), as amended by Notification 06/2026-Central Tax (Rate); Notification 12/2017-Central Tax (Rate), S. No. 22; Notification 13/2017-Central Tax (Rate), S. No. 15, as amended by Notification 08/2026-Central Tax (Rate).

When issuing rental invoices under this SAC code, service providers should clearly show the rental amount, the applicable GST rate and tax value so that business customers can account for the expense and input tax credit correctly. The same SAC code and rate should then be reflected in GSTR 1 and GSTR 3B for outward supplies to keep GST records clear and consistent.

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Explore More SAC Codes Under 9966

Practical Classification Guidance

Service providers should choose the SAC code that best represents whether they are renting transport assets, handling cargo or providing warehousing and support. Correct SAC selection and GST rate application help businesses claim input tax credit properly and make GST returns easier to explain during audits or departmental checks.

Conclusion

Vehicle rental services under SAC 996601 cover renting cars, buses, trucks and coaches for self drive or with driver. These services are typically taxed at 18 percent with input tax credit, as they support business travel and logistics. Rental operators and corporate users should structure agreements properly, apply the correct GST rate on rental bills and maintain clear documentation in GST returns. For long term lease like models or mixed use, it is sensible to study the latest GST guidance and seek expert advice.

Frequently Asked Questions

Clear answers to common queries about SAC Code 996601 and GST compliance.

What does SAC code 996601 cover in GST?

SAC 996601 covers rental services of road vehicles like cars, buses, trucks and coaches, with or without drivers, when the main supply is giving vehicles on rent or lease, not just simple passenger transport. It applies to self drive rentals and long term vehicle hire arrangements.

Does SAC 996601 include car, bus, truck and coach rental services?

Yes. Renting cars for self drive, hiring buses with drivers for regular staff movement and leasing trucks for logistics operations can all fall under SAC 996601. The key feature is that the customer gets control or use of the vehicle for a period, not individual tickets.

What is the GST rate on vehicle rental services under SAC 996601?

Vehicle rental services are usually taxed at standard GST rates, commonly 18%, though some passenger vehicle rentals with specified conditions may have concessional rates. The rate can also differ when fuel is included or excluded. Providers must check the relevant notifications for their exact rental structure.

Should self drive and chauffeur driven rentals both use SAC 996601?

Yes. Both self drive rentals and rentals with driver are typically classified under SAC 996601 when they involve renting the vehicle for hours, days or months. Only when the service resembles regular passenger transport by tickets or fixed routes might other transport SAC codes apply instead.

Is ITC available on GST paid for SAC 996601 services for businesses?

ITC on motor vehicle related services is restricted in many cases. Businesses may claim ITC when vehicles are used for further supply of such services, training, or transport of goods, but not usually for employee transport. Rules are complex, so ITC eligibility must be checked carefully case by case.

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Important Disclaimer

The above does not constitute professional advice or a formal recommendation. We recommend consulting a professional tax consultant before acting on the information contained in this piece of content.