Goods Transport Agency (GTA), Key changes effective 18th July 2022

 

The first and foremost thing is, invoices issued from 18th July 2022 by GTA service providers should contain the following declaration on their invoices, if they have opted to pay GST on a forward charge mechanism vide Notification No. 05/2022-Central Tax (Rate)

"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"

Until now, GTA service providers had option to discharge the GST on a Reverse charge basis @ 5% with out ITC or Forward charges @ 12% with ITC. This is changing now as: 

1. Choose to pay GST under Reverse Charge Mechanism@ 5% with out ITC as their customers discharge GST liability. Customers can always avail the ITC on their RCM payments
2. Choose to pay GST on a Forward Charge Basis
• @ 5% without ITC
• @ 12 with ITC

Earlier the options exercised by the GTA service providers was never communicated to the department, in this aspect vide Notification No. 03/2022- Central Tax (Rate), the following declaration is to be submitted on or before 16th August 2022 for the Financial Year 2022-23. Otherwise, for all the upcoming Financial Years, this deadline will be on or before 15th March of the previous Financial Year

FORM - Annexure V 

Form for exercising the option by a Goods Transport Agency (GTA) for payment of GST on the GTA services supplied by him under forward charge before the commencement of any financial year to be submitted before the jurisdictional GST Authority.

Reference No.-

Date: -

1. I/We______________ (name of Person), authorised representative of M/s……………………. have taken registration/have applied for registration and do hereby undertake to pay GST on the GTA services in relation to transportation of goods supplied by us during the financial year……………under forward charge in accordance with section 9(1) of the CGST Act, 2017 and to comply with all the provisions of the CGST Act, 2017 as they apply to a person liable for paying the tax in relation to supply of any goods or services or both;

2. I understand that this option once exercised shall not be allowed to be changed within a period of one year from the date of exercising the option and will remain valid till the end of the financial year for which it is exercised.

Legal Name: -

GSTIN: -

PAN No.

Signature of Authorised representative:

Name of Authorised Signatory:

Full Address of GTA:

(Dated acknowledgment of jurisdictional GST Authority)

Note: The last date for exercising the above option for any financial year is the 15th March of the preceding financial year. The option for the financial year 2022-2023 can be exercised by 16th August, 2022.”.

Please also note the following exemptions given for GTA service providers are stand withdrawn effective 18th July 2022 vide Notification No. 04/2022 -Central Tax (Rate)

Serial 21- following clauses are omitted 

"(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;

(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;"

Reflections:

The major cost of any GTA service providers are fuel and Vehicle hire charges. While fuel is outside GST remit, and Vehicle hire charges( suffered by GTA) is exempt under the Law, the option of 5% Forward Charge Basis is welcoming as there was no significant ITC claimed by GTA opted for 12% Forward charge basis in the past. Rather this indeed an advantage for their customers (as a working capital) with 60- 90 days payment cycle while the enjoying the ITC instantly. 

All other things as to how RCM works and to whom its applicable remains unchanged. it goes unsaid that one can't choose multiple options under same GSTIN, which is addressed now with these declarations.

- LDR

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The opinions, suggestions or thoughts expressed are that of the author of this article, please exercise adequate care in applying to your own scenario with appropriate technical advise as deem necessary.