Article on ‘All about GTA under GST’ by CA Abhishek Malpani, Advisor, Bizsolindia Services Pvt. Ltd. (October 2023)

There are important changes for RCM liability for GTA considering forward charge optionality to GTA. Kindly go through below changes carefully & do necessary changes in for GTA RCM working.

Option to pay GST under forward charge for GTA services supplier was inserted by notification 03/2022 – Central tax (rate) dated 13.07.2022. Services of Goods Transport Agency (GTA) in Relation to Transportation of Goods (Including Used House Hold Goods For Personnel Use Supplied by a GTA:

Instance GST Rate FC / RCM Conditions for Supplier (i.e. for GTA) Condition For Recipient (i.e. for company)
(a) GTA Does Not Exercise the option to itself pay GST on the Service Supplied by it 5% RCM GTA Shall Not Take ITC to charge on Goods And Services used in Supplying the GTA Services 1) Recipient of GTA Services (Registered Factory, Society, Co-Operative Society, Any Person Registered under GST, Body Corporate, Partner Ship Firm, Any Casual Taxable Person) Must Check Whether Declaration As Per Annexure III is Mentioned on invoices i.e GTA Will Pay GST under Forward Charge. if Such Declaration is not Found on the invoices, Pay GST @5% under RCM.

 

2) Recipient Can Take ITC of GST Paid under RCM if Eligible to Him.

 

(b) GTA Exercises the option to itself pay GST on Services Supplied by it. 5% Forward Charge 1. GTA is Registered under GST

2. GTA to Exercise option to pay GST by it under Forward Charge by Submitting Declaration in the format Annexure-V on or Before 15th March of the Preceding Financial Year

3. GTA to Issue A Tax Invoice to the Recipient Charging  GST and Make a declaration as Prescribed in Annexure III on Such Invoices.

4. GTA Shall Not Take ITC  Charged on Goods and Services used in Supplying the GTA Services

 

Recipient Can Take ITC of GST Paid By GTA, if Eligible to Him. No GST under RCM to be paid as GTA has given declaration on the invoice as prescribed in Annexure III.
(C) GTA Exercises the option to itself pay GST on Services Supplied by it. 12% Forward Charge 1. GTA is Registered under GST

2.GTA to exercise option to pay GST by it under Forward Charge by Submitting Declaration in the format Annexure-V on or Before 15th March of the Preceding Financial Year

3. GTA to Issue a Tax Invoice to the Recipient Charging  GST and make a declaration as prescribed in Annexure III on such invoices.                                                                                            4. GTA shall take ITC  charged on goods and services used in supplying the GTA services

 

Recipient Can Take ITC of GST Paid By GTA, if Eligible to Him. No GST under RCM to be paid as GTA has given declaration on the invoice as prescribed in Annexure III.

Note:- 

  1. The option by GTA to itself pay GST i.e Forward Charge on the services supplied by it during a Financial Year shall be exercised by making a declaration in Annexure V on or before the 15th March of the preceding Financial Year. 
  2. If the service provider has exercised the option to pay tax under Forward Charge then they should also mention in the invoice a declaration as per Annexure-III 
  3. The GST portal should display the option exercise by the service provider
  4. Withdrawal of exemption related to the supply of service by the GTA for the amount of Rs.750/- or Rs.1500/- as the case may be. Now the service of GTA is taxable from Rs.1 w.e.f 18th July, 2022.

 

Annexure III Declaration:

Declaration on Invoice

I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year _____ under forward charge.”

Can GTA opt to pay Tax under both – forward charge and reverse charge?

GTA opting to pay tax under FCM either 5% or 12%, shall be liable to pay tax said rates throughout under FCM on all services of GTA supplied by it – notification 11/2017 – central tax (rate) dated 28.06.2017 as amended by notification 20/2017 central tax (rate) dated 22.08.2017 and notification 3/2022 central tax (rate) dated 13.07.2022 w.e.f. 18.07.2022.

Hence it is not discretionary for the GTA to opt for both scheme of taxes simultaneously.

Whether Consignment note is required for covering under GTA? 

There are some important judgements under GTA. I have noted some judgements / advance rulings for your reference.

  • GST on GTA cannot be avoided by non-issuance of consignment note. [K M Trans Logistics Pvt. Ltd – Order No. RAJ/AAAR/5/2019-20 dated 20.11.2029] 
  • Sub-contractor appointed for transportation of goods not a ‘GTA’, ‘consignment note’ issuance an ‘essential conditions’. [M/s Liberty Translines – AAAR Maharashtra 2020 (41) GSTL 657]

My take:

Apparently, determination  of status quo of service provider as GTA, based on issuance of consignment note has been contentious issue since pre-GST era, which continues even in GST regime, The main reason of dispute is because of the exemption granted to the services of transportation of goods by road. Bare perusal of definition of GTA would imply that if a transporter does not issue the consignment note, the service provider will not come within the ambit of GTA. But the stated provision must not be interpreted in the sense so as to take the benefit of exemption under the grab of non-issuance of consignment note.

When GTA services are not liable to reverse charge? 

  • Supply of service to non-specified person or unregistered recipients
  • When GTA opts to pay tax under forward charge
  • When GTA service is supplied to department / establishment of Central or statement government, Union Territory, Local Authority or government agencies, which has taken registration under GST only for the purpose of deducting TDS under Sec 51 of the CGST Act.

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