ITC on GTA paid for outward transportation

[GOPAL CHOWDHURY]

Dear Experts,

As under GST, GTA will be payable under reverse charge and forward charge notification was provided in that respect.

It was further clarified that ITC will be available for the RCM paid under reverse charge under section 9(3) of the CGST Act, 2017 and not on the forward charge.

in this regard I want to know, can a manufacturing company avail ITC on the GTA paid by them for outward transportation.

As under erstwhile law ITC on outward transportation is not allowed.

kindly let me know.

[KASTURI SETHI]

In pre-GST era credit on outward freight was allowed depending upon the place of removal. Now who pays the freight will get ITC. Thus allowed for both periods. You know the basic condition of ' in course of business or furtherance of business' has to be followed.

[GOPAL CHOWDHURY]

Dear Sir,

with reference to your reply it was clear by Notification under Central Tax Rate & under IGST Rate that credit is available to the recepient of service under RCM not in forward charge and as the Notification does not clarify like Service Tax is it available or not for outward transportation excluding FOR sale and Consignment sale cases like that yet.

Further, Secton 15(5)(b) which talks about credit is not available for following supply of goods and services or both...

"(i).............. except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply"

As per this provision no where it allows ITC of GTA services used for outward supplies, but as still there is nothing has come out from ministry yet to understand that ITC of GTA is not available on outward supply, so may be manufacturer can claim.

If some other expert has some other expert views on the same kindly let me know.

[KASTURI SETHI]

Dear Querist,

First of all it is Section 17(5)(b) and NOT Section 15(5)(b).

Secondly this ' (B)' referred by you, pertains to (iii) rent-a-cab, life insurance and health insurance. It cannot be generalised.

[GOPAL CHOWDHURY]

Sir,

Its a typing error, I meant it 17(5)(b) of the CGST Act,2017.

Thanx for the clarification

AI Summary

Input tax credit on GTA services may be claimed by the payer despite outward supply unless exclusions apply.
Whether a manufacturer may claim input tax credit on GTA services for outward transportation hinges on who pays the freight and the charge mechanism: where GTA tax is paid under reverse charge the recipient who pays can claim ITC, subject to the requirement that the supply is for business or furtherance of business; the statutory exclusion referenced by the querist pertains to specific services and does not generally bar ITC for GTA, and no definitive administrative clarification had been provided in the discussion.