This article aims to shed light on the options available to GTAs, namely Reverse Charge and Forward Charge, along with the associated implications and requirements.
Meaning of GTA: GTA means any person who provides service in relation to transport of goods by road and issues consignment note. If no consignment note is issued then those services will not be covered in GTA and shall be exempt from GST. Thus, a consignment note is an essential condition to be considered as a GTA.
GST Rate on GTA Services:
Alternatives provided to registered GTA is as below:
Reverse Charge Option: In this case, the service recipient becomes responsible for paying the Goods and Services Tax (GST) at a rate of 5% under the reverse charge mechanism.
Forward Charge Option: The Forward Charge option provides the GTA with two alternatives.
- Forward Charge @ 5%: If the GTA selects this option, they can supply their services at a rate of 5% GST. However, it’s important to note that no input tax credit will be available for services supplied at this rate. In other words, the GTA will not be able to claim a credit for the GST paid on their inputs.
- Forward Charge @ 12%: Alternatively, the GTA may choose the Forward Charge option at a rate of 12% GST. Opting for this rate allows the GTA to claim input tax credit for the GST paid on their inputs. This option enables the GTA to offset the GST paid on their purchases against the GST collected on their supplies.
Exercise of Option: The GTA is required to exercise their option for the Forward Charge at the beginning of each financial year. The deadline for filing the declaration is March 15th of the preceding financial year. For example, if the GTA intends to choose the option for the financial year 2023-24, they must file the declaration before March 15th, 2023. Failure to comply with this deadline may result in the GTA being unable to avail the Forward Charge option for that financial year. However, for the financial year 2023-24-time limit has been extended (NOTIFICATION NO 05/2023-Central Tax (Rate).
The option to choose the tax payment method for the Financial Year 2023-2024 must be exercised by May 31st, 2023.
However, if a Goods Transport Agency (GTA) starts a new business or exceeds the threshold for registration during any Financial Year, they can choose to pay the Goods and Services Tax (GST) on their services by submitting a declaration within 45 days from the date of applying for GST registration or one month from the date of obtaining registration, whichever is later.
Declaration Form: To exercise the Forward Charge option, the GTA must submit a declaration to the jurisdictional GST Authority before the commencement of the respective financial year. The declaration should include the GTA’s legal name, GSTIN, PAN number, and the authorized representative’s signature. By signing this form, the GTA acknowledges their liability to pay GST under the Forward Charge mechanism and agrees to comply with all relevant provisions of the CGST Act, 2017.
Disclaimer: This Article is only a knowledge sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update etc if any.
