GST Update - Reverse Charge shifted to Forward Charge in respect GTAs opting for payment of GST @ 12%
CA Vikram Khaitan/ARV Group
Please note that Notification No. 20/2017 – Central Tax (Rate) dated 22-08-2017 has been issued amending Notification No. 11/2017 – Central Tax (Rate) dated 28-06-2017, which prescribed rate of GST on supply of Service.
In the said amendment, an option has been given to the Goods Transport Agency (GTA) to pay GST @ 12% and avail full Input Tax Credit on all Goods and Services used for supply of Service. However, the same is subject of condition namely that Goods Transport Agency (GTA) opting for such option will pay central tax @ 12% on all the services of GTA supplied by it i.e. no reverse charge mechanism would apply in such cases.
To give effect to the aforesaid amendment, Notification No. 22/2017 – Central Tax (Rate) dated 22-08-2017 has been issued stating the payment of GST under Reverse Charge Mechanism is applicable only on services received from GTA’s, who have not opted for payment of GST @ 12% i.e. it is applicable only for GTA’s paying GST @ 5%.
Thus the following scenarios stand in view of following amendment –
(a) Pay GST @5% under Reverse Charge Mechanism on Services received from Goods Transport Agency opting for payment of GST @ 5%. In such case, no ITC is available to the transporter, however, full ITC is available to the Service Recipient, subject to Section 17; or
(b) No payment of GST under Reverse Charge Mechanism on Services received from Goods Transport Agency opting for payment of GST @ 12%. The same will be shifted from Reverse Charge to Forward Charge and GTA would levy tax @ 12% on their invoices. Full ITC is available to both GTA and Service Recipient, subject to Section 17.
In case you require any further clarification, feel free to get in touch with us.
Thanks & Regards,
CA Vikram Khaitan
Partner – GST Division
ARVG & Associates, Chartered Accountants
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D: +91-33-4064 4076; M: +91-98315 86568
Email: vik...@arvsolutions.co.in / in...@arvsolutions.co.in
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