Table of Contents
1. What do you mean by reverse charge mechanism under GST?
- Normally, the supplier should collect GST from the receiver and remit it to the government. In cases where reverse charge mechanism is applicable, the onus to pay GST rests upon the receiver of the supply.
2. Should goods transport agency (GTA) pay GST?
- Yes, a GTA should pay GST, however, payment of such GST under forward charge or reverse charge mechanism depends on various scenarios
3. When is a GTA required to pay GST under forward charge mechanism?
- A GTA opting to pay GST @ 12% (6% CGST, 6% SGST) should discharge its GST liability under the forward charge mechanism.
4. Can a GTA claim Input tax credit (ITC)?
- A GTA cannot claim ITC if it opts to passes its liability to pay tax to specified recipients under RCM @ 5% (2.5% CGST, 2.5% GST), however, it can claim ITC if it opts to pay GST @ 12% (6% CGST, 6% SGST).
5. When is Reverse charge mechanism applicable for services received from a GTA?
- A GTA opting to pay GST @ 5% can pass its liability to pay GST to the service receiver.
- However, RCM is applicable only when the service recipient is one of the 7 specified recipients.
- Refer FAQ No. 6 to know more about specified recipients.
6. Who are the specified recipients who are required to pay GST under RCM in respect of services acquired from a GTA?
- Factory
- Society
- Any co-operative society
- Any person registered under GST law
- Any body corporate
- Any partnership firm
- Any casual taxable person
The above mentioned service recipients are required to pay GST @ 5% under RCM in respect of services acquired from a GTA.
7. Are persons registered under GST Law only for the purpose of deducting TDS, required to pay GST under RCM?
- No, the persons registered under GST law only for the purpose of deducting TDS under section 51 of the CGST Act shall not pay GST under reverse charge mechanism on receipt of services from a goods transport agency.
8. Is GST exempt in respect of GTA services received by persons who are registered under GST law only for the purpose of deducting TDS?
- Yes, persons who are registered under GST law only for the purpose of deducting TDS need not pay GST on RCM basis in respect of GTA services. (Exempt Entry of 21B of notification no 12/2017 CT(R) dated 28.06.2017.
9. Are any persons exempt from paying GST under RCM if they acquire services from a GTA?
- Any person receiving services from a GTA other than the specified persons are not required to pay GST under RCM in respect of the goods transport service acquired from a GTA. Such supply is exempt from GST. (e.g. unregistered persons, end customer etc).
10. What is the rate of GST applicable for GTA services?
- Under heading 9965 (goods transport services) & heading 9967 (Supporting services in transport) – if GTA does not avail ITC – 5% (2.5% CGST, 2.5% GST). – this has to be discharged under RCM by the specified recipients of the service.
- Under heading 9965 (goods transport services) & heading 9967 (Supporting services in transport) – if GTA avails ITC – 12% (6% CGST, 6% SGST). – this has to be discharged under forward charge mechanism by the GTA.