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GST Provision related to GTA(Goods Transports Agency)

goods-transport-agency

GST Provision related to GTA (GOODS TRANSPORT AGENCY)

  • Important amendment for good transport agency (GTA) under Reverse charge mechanism (RCM) & forward charge. As per new Notification certain option has been provided to goods transport agency (GTA) to charge GST under Forward charge and there are certain changes in Reverse charge mechanism (RCM) U/s 9(3) of CGST (Central goods & service tax ) Act 2017
  • To opt for paying GST under forward charge basis at Rate of 12% with input tax credit & 5% without Input Tax credit advantage in a FY, A GTA has to fill a form -Annexure V by March 15 of the last FY. This timeline extended till May 31 2023. (CBIC vide Notification No. 05/2023-Central Tax (Rate) dated May 09, 2023 ).

Analysis of Provisions Related to GTA(Goods Transport Agency):

Prior to this amendment of GST Act, For the Purpose of Taxation of GTA, Taxpayer have only two option which are mentioned Below i.e.

  • Goods Transport Agency may charge GST @ 5% without ITC in such case the specific recipient are liable to discharge the GST under Reverse charge mechanism (RCM) as per U/s 9(3) Notified under Notification No. 13/2017 Central tax. OR
  • Goods Transport Agency may charge GST @ 12% with ITC as per Notification No. 11/2017 Central tax in such case GTA has to charge the GST under Forward charge.

While both options have been available to GTA under the low for some time , the same has been enable on the GST portal only recently . This new amendment will be in line with Notification No. 03/2022-Central tax (Rate) dated 13th July 2022 .

Now as per new amendment – on Goods Transport Agency:

  1. GTA can exercise option to GST under forward charge may charge GST @ 5% without ITC or may charge GST @ 12% with the option of taking ITC but option to be exercised within a time frame in Annexure V . Option for FY 2022-23 to be exercise before 16-Aug.-2020. Invoices for the period 18-july-2022 to be issued before exercising the option provided option exercise on or before 16-Aug.-2022. Invoice required a declaration in the format specified in Annexure III

GTA can exercise option to pay GST under forward charge

  • 5% without ITC
  • 12% with ITC
  • Option to be exercised within a time frame in Annexure V
  • Option for FY 2022-23 to be exercise before 16-Aug.-2020
  • Invoices for the period 18-july-2022 to 16-Aug.-2022 to be issued before exercising the option provided option exercise on or before 16-Aug.-2022
  • Invoice requires a declaration in the format specified in Annexure III

The GTA who file Annexure V cannot switch back to RCM in between the financial year.

The CBIC extended the registration threshold in between the financial year 23-24 can file Annexure V within 45 days of GST registration application or one month from the date of getting registration certificate, whichever is later. 2.As per the decision taken in the GST council the deadline to exercise this option will hereafter be 31st march of the preceding financial year instead of 15th march. Notified by the CBIC

Or

2.GTA can exercise option to GST under Reverse charge mechanism (RCM) may charge GST @ 5% and not eligible for claiming ITC. RCM is not applicable in case supplier is registered, issue invoice  and file declaration prescribed in Annexure III and has exercise option under FCM.

And some exceptions are there, that means in all case RCM is not applicable even conditions for RCM is applied that case are;

-when services are provided by GTA to State Govt./Central Govt. and local Authority and Government agency  , that mean in case where Recipient (who pay or liable to pay freight) is State Govt./Central Govt. and local Authority and Government agency Forward charge is applicable rather than  RCM. Where GTA exercise the RCM ( Reverse charge mechanism )

  • GST 5% without ITC
  • RCM is not applicable in case supplier is registered and file declaration prescribed in Annexure III and has exercise option under FCM , issue invoice.

NOTE ; Reverse charge not apply in case :

Services provided by GTA to :-

  • State Govt. / Central Govt.
  • Local authority
  • Government agencies

NOTE ; Recipient in case of GTA ( who pay or liable to pay freight ) is registered then RCM is applicable At the rate of 5% and not eligible for taking ITC OR may eligible for FCM charge GST @ 12% rate and eligible taking ITC.

NOTE ; Recipient in case of GTA ( who pay or liable to pay freight )

  • IS REGISTERED.
  • RCM is applicable with 5% rate , ITC not taken
  • FCM is applicable with 12% rate , ITC taken
  • IS UNREGISTERED.
  • Exempt from GST

KEY EXEMPTIONS WITHDRAWN IN THE CASE OF GTA & AMENDMENT

  • Goods Transport Agency where consideration for transportation in a single carriage does not exceed Rs. 1,500/- GTA where consideration for transportation of all such goods in a single carriage does not exceed Rs. 750
  • The CBDT recently announced that the GTA is exempt from yearly declaration for GST under forward charge on the proposal of the 50th Meeting of the GST Council. The GTAs won’t be needed to submit a declaration each year for paying GST under the advance charge With effect from July 27, 2023,

Impact of Analysis of Provisions Related to Goods Transport Agency.

Some of the benefits of opting into the forward charge mechanism are:

  • The Goods Transport Agency can be in control of their compliance and ensure that taxes are paid on their supplies.
  • Opting into forward charge may have a positive impact on sales as the recipient of supplies is not burdened to calculate and pay the taxes.

The Goods Transport Agency given two different GST rate to choose from. In case where their vendor base is non-compliant, they can opt for 5% GST rate so that they do not need to deal with the hassles of claiming ITC.

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