GTA PAID - ITC AVILABLE --REG

[venkat eswaran]

Dear all,

We are service receiver and if we pay GTA 5% under GST Reverse charge mechanism , can we able to take credit this and adjust against GST payable?

If GTA paid by transporter itself and sending the bill can we able to take credit this and adjust against GST payable?

Thanks in advance

Venkat

[KASTURI SETHI]

In my view, ITC is not admissible in both ways.

[Kusalava InternationalLimited]

Dear Mr. Venkat,

As per Sl. No. 3 of "Schedule of GST Rates for Services as approved by GST Council", the rate of GST w.e.f. 01.07.2017 is 5% on GTA Services with no Input Tax Credit (ITC).

Hence you are not entitled for credit of Tax paid on GTA under GST.

N V T D Prasad

[RAKESH R]

According to me, in both cases, you are entitled to input tax credit for the 5% GST paid on transportation charges under reverse charge in as much as the 'transportation service' is used in the course of furtherance of business supply'. There is no change from the provisions of existing Cenvat Credit Rules for GTA under the provisions of Service tax under reverse charge prior to 1.7.2017.

The cap mentioned in the GST Rate Schedule i.e. "NO INPUT CREDIT' is relating to non availment of input credit for payment of 5% tax by reverse charge assessee. In other words, the entire amount is payable by cash deposit account only. Further, the actual service provider is not entitled to any input tax credit. To be on the safer side you may take a declaration from the GTA service provider to the effect that "No input tax credit availed by him on inputs, capital goods and input services by him while providing the service of GTA". This is enough.

Further, under Input Tax Credit Rules, No specific exclusion for GTA service on which tax is paid under reverse charge as ineligible item for credit. When no such exclusion, you are eligible to take credit of the 5% tax after payment by cash.

For your benefit, the provisions under erstwhile service tax prior to 1.6.2017 and current provision under GST is tabled here and you can see there is no difference except the rate.

ERSTWHILE PROVISION UNDER SERVICE TAX / CENVAT CREDIT PRIOR TO 1.7.2017

Explanation in Rule 3 of Cenvat Credit Rules, 2004.

[Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient.]

Notification No. 26/2012- Service Tax

AI Summary

Input tax credit entitlement for GST on transport agency services may be claimed by recipient under reverse charge. Whether ITC is available for GST paid on GTA services under reverse charge is disputed: one view rejects ITC citing the rate schedule note of 'no input credit,' while an alternative view holds that recipients who pay under reverse charge may claim ITC because the ITC rules contain no specific exclusion for GTA services; obtaining a supplier declaration that no ITC was availed by the GTA is advised as a compliance safeguard.