# Exemption: Passenger Transportation Service

## A. By Road

Mode	Status
Metered cab, auto-rickshaw, e-rickshaw	Exempt*
Non-AC stage carriage	Exempt*
Non-AC contract carriage for tourism, hire, conducted tour	Taxable
Non-AC contract carriage (other; on pre-determined route & schedule)	Exempt*
Radio taxi / AC stage carriage / otherwise	Taxable

*If the service is notified u/s 9(5) and is provided through an Electronic Commerce Operator (ECO), it becomes Taxable (ECO pays).

### Key Definitions

Stage carriage — motor vehicle carrying >6 passengers for hire/reward at separate fares.
Contract carriage — motor vehicle carrying passengers under a contract.
Hire — vehicle taken on rent for a period; usage/control rests with the recipient → No exemption when 'hired'.
Non-AC contract carriage qualifies for exemption only if transportation is on a pre-determined route and schedule.

## B. Other Than Road

### Railway

AC coach or First Class → Taxable
Metro, Monorail, Tramway → Exempt
Other (sleeper, general) → Exempt

### Waterway

Inland waterway → Exempt
Vessel within India:
Predominantly for tourism → Taxable
For public (not predominantly tourism) → Exempt

### Airway

Passenger embarking or terminating in A.P., Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Bagdogra (W.B.) in economy class → Exempt
Otherwise → Taxable

## Other Specific Exemptions

3. Transport of passengers embarking from or terminating at a Regional Connectivity Scheme (RCS) airport against Viability Gap Funding — Exempt for 3 years from start of operation.

4. Giving on hire/renting:

To State Transport Undertaking (e.g., BEST, DTC) — motor vehicle to carry >12 passengers.
To Local Authority — electric motor vehicle to carry >12 passengers.
To a Goods Transport Agency — means of transport of goods (e.g., trucks).
To a person providing transport to an educational institution (up to HSC) — motor vehicle for student/faculty/staff transport.

Worked example

### Example 1

Q. BCG Ltd. contracts with ABC Transporter (non-AC contract carriage) to ferry employees on pre-determined routes/schedule.

A. Non-AC contract carriage on pre-determined route/schedule; not hire/tourism/conducted tour → Exempt.

### Example 2

Q. ABC Ltd. operates a vessel between Goa and Diu for local residents; some tourists also use it.

A. Vessel within India, not predominantly for tourism → Exempt.

### Example 3

Q. A passenger flies economy class from Guwahati (Assam) to Delhi.

A. Embarkation in Assam in economy class → Exempt.

### Example 4

Q. ABC Ltd. rents a 30-seater bus to Rajasthan Roadways and an electric 15-seater to Jaipur Municipality.

A. Both are exempt — rent of >12-seater bus to STU, and electric >12-seater to LA.

### Example 5

Q. ABC Ltd. rents a bus to Dev Transporter, who in turn ferries school students/staff.

A. Both legs exempt — (i) ABC → Dev (hire to person serving schools), and (ii) Dev → School (transport for educational institution).

⚠️ Common exam mistakes

Treating all non-AC contract carriages as exempt — exemption requires pre-determined route and schedule (not 'hire/tourism/conducted tour').
Confusing 'hire' with 'renting' — 'hire' implies recipient has control over use, breaking the exemption.
Forgetting that AC stage carriages and AC railway coaches/First Class are taxable.
Assuming all NE-state flights are exempt — only economy class with embark/terminate in those listed regions.
Missing that ECO-notified passenger transport flips to taxable even where the underlying mode is exempt.

Reference: Section 9(5) — Notification No. 12/2017-CT(R) read with Section 9(5) CGST Act

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Exemption - Passenger Transportation

Worked example

⚠️ Common exam mistakes