Article on ‘GTA Services forward Charge & RCM’ by Adv. Kiran Sawale, Bizsolindia Services Pvt. Ltd.(September 2022)

CBIC through recent Notification dated 13th July 2022 has brought more clarity on applicability of GST under forward charge or Reverse Charge Mechanism (RCM) to avoid confusion in the mind of recipient when he should pay GST under RCM.

Let us first understand the concept of GTA.

Good Transport Agency (GTA) means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. The person who issues invoice for transportation of goods whether he is GTA or not can be seen from the document called consignment note / Lorry Receipt. In case supplier has transported the goods by it’s own vehicle then said supplier cannot be called as GTA and services provided by such person are exempted from GST under Serial No. 18 of Notification No. 12/2017 CT dated 28.06.2017.

Below is the summary of applicability of forward charge or reverse charge in case of services provided by GTA.

Instances	GST Rate	Forward / Reverse Charge	Conditions for Supplier	Conditions for Recipient
Services of Goods Transport Agency (GTA)in relation to transportation of goods (including used house hold goods for personal use) supplied by a GTA where –
(a)GTA does not exercise the option to itself pay GST on the services supplied by it;	5%	RCM	GTA shall not take ITC charged on goods and services used in supplying the GTA services	1. Recipient of GTA Service (Registered Factory, Society, Co-operative Society, Any person registered under GST, Body Corporate, Partnership Firm, any casual taxable person) must check whether declaration as per Annexure III is mentioned on Invoice i.e. GTA will pay GST under forward charge. If such declaration is not found on the invoice, 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 and 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. (option for FY 2022-23 to be exercised before 16th August 2022)   2. GTA to issue a tax invoice to the recipient charging GST and make a declaration as prescribed in Annexure III on such invoice.   3. 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.
(b)GTA exercises the option to itself pay GST on services supplied by it	12%	Forward Charge	1. GTA is registered under GST and 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. (option for FY 2022-23 to be exercised before 16th August 2022)   2. GTA to issue a tax invoice to the recipient charging GST and make a declaration as prescribed in Annexure III on such invoice.   3. GTA can 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.

Exemption on GTA Services:

Earlier exemption from GST has been withdrawn on GTA services where transportation charges having less than Rs. 1000/- for single carriage and Rs. 750/- for single consignee. Though the compliance burden is reduced for recipients of GTA services to track the consignment value and avail exemption, it will impact on small businesses where even smallest consignment will be taxed.

Now exemption is available only for transportation of following goods by GTA:

1. agricultural produce;
2. milk, salt and food grain including flour, pulses and rice;
3. organic manure;
4. newspaper or magazines registered with the Registrar of Newspapers;
5. relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
6. defence or military

Acton points for Recipient of GTA Service before making payment under RCM.

Considering the amendment, the recipient of GTA services should take adequate precautions to ensure GST is paid under RCM in all applicable cases to avoid any disputes in future.

1. If GTA is not registered under GST, recipient to pay GST under RCM.
2. Recipient of GTA services should check the invoice of supplier where GST is not charged by GTA and declaration towards payment of GST under forward charge is not men- tioned, then pay GST under RCM.
3. GTA has not charged GST on invoice but just declaration is mentioned that he will charge GST under forward charge. Clarification to be sought from GTA whether he is under forward charge, if not pay GST under RCM.
4. GTA has charged GST on Invoice, but no declaration is mentioned that he will charge GST under forward charge. Declaration to be sought from GTA that he is charging GST under forward charge and request GTA to mention the same on invoices to avoid unnec- essary questions from GST authorities.

Format of Declaration to be mentioned on invoice by the GTA prescribed under Notifica- tion No. 05/2022-Central Tax (Rate) dated 13th July 2022:

Annexure III

Declaration

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.

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