FCM & RCM in Transport Business

[Karthik Manoharan]

Dear Sir,

With ref to the above subject, i doing a transportation business and having a GST registration Number.

Hence, i want to know about the RCM & FCM in GST

So, Kindly do the needful.

With Regards

Karthik M

[DR.MARIAPPAN GOVINDARAJAN]

Please refer the provisions of the Act and rules and if any doubt is there then share it in this forum. This forum is not to each a particular aspect.

[KASTURI SETHI]

Rightly expressed by Dr.Govindarajan, Sir. The querist should ask for solution of specific problem/ complicated issue where situation calls for interpretation. . We are not supposed to explain the whole law.

[Karthik Manoharan]

Sir,

If i am doing FCM and giving 12% additional in one company & other company giving RCM only my freight

can i do both

Kindly do the needful.

With Regards,

Karthik M

[Himansu Sekhar]

You do not have the obligation of FCM, when the recipient of the GTA service is a company. Even if you charge and pay, the liability of the recipient will not vanish.

[Himansu Sekhar]

Consulting a consultant is an option before paying GST

[YAGAY andSUN]

To all experts,

Please do not demoralize any person/query seekers that this is not the forum to raise such question. In our view even silly questions need smart answer. If we could not understand the question, then we may ask it again and then accordingly revert.

 

[KASTURI SETHI]

There is a logical force in the request of M/s.YAGAY and SUN. So it is worth to be followed by us.

[YAGAY andSUN]

Thank you, Kasturi Sir.

[Sanjay Aggarwal]

If a GTA opts for paying tax under FCM, the GTA has to charge GST under FCM on all the GTA services provided by it.

Hence, a GTA cannot raise invoice to one customer in FCM and to another in RCM

[Guest]

MR. Sanjay agarwal,

can you provide any link where it is written that hybrid procedure is not allowed.

[KASTURI SETHI]

Decision taken in 20th meeting of GST Council on 5.8.2017

8.

Goods Transport Agency Service (GTA)

Allowed option of 12% GST with full ITC under forward charge. 5% GST with no ITC will also continue. (However, the GTA has to give an option at the beginning of financial year

As per the above decision, in case GTA intends to supply service under FCM, that person has to give an option at the beginning of financial year. It makes it clear that GTA has to either supply service under FCM or RCM. Filing of option itself means GTA has to choose one out of two ; either FCM or RCM. After filing option, GTA is legally bound not to follow one mechanism. There is no doubt at all.

[Siva Rama]

Dear Tax Management Experts,

GTA were not at all needed to take GST registration, if they provide service only to specified category of Service receivers. These specified categories of service receivers will directly deposit GST to Government on RCM basis. This specified category of persons include GST registered person also.

So if GTA provides service to unregistered person (URD), GTA were liable to take registration. So GTAs instead of they taking GST registration, started insisting/forcing all URD to take registration even though URDs are not liable to take. Otherwise they won’t give service to URD. So Govt interfered in this matter and exempted the service of GTA, if GTA is providing service to an URD.(Notification 32/2017 Central tax rates)

Now GTA has two rates option

GTA service provider opts for 12%	ITC fully available for service provider	No RCM headache for any service receiver (Actually the term any service receiever will never come because there is no GST if GTA provides service to other than specified category of person. Notf 32/2017. So by this, the bolded sentence will become “No RCM headache for specified category of Service receiver”)	ITC 12% is available for Service receiver
GTA service provider opts for 5%	No ITC available for service provider	RCM headache is there for specified category of Service receiver.	ITC 5% is available to service receiver.

Doubt No 1

I have a doubt. why a GTA would opt for huge 12% GST?

I am not at able to think a scenario why a GTA will opt for huge 12% instead of 5%(5% will be always paid through RCM by service receiver. He even need not take GST registration for this).

What will be the input credit available to him? What is the major input service available to him? The business of GTA will be in an office premise and with accountants or clerks booking and acting as intermediary between transporters (eg truck Owner) and product supplier (eg a manufacturer supplying goods)

GTA is never owner of any transport. So he has no repair expense or capital goods like tyre purchase for taking credit.

Maximum credit will be from administrative expense like telephone, broadband internet some petty things.

I don’t know what is the reason for Govt fixing these two rates 12% (with full ITC) and 5% (with no ITC)?

Doubt No2

Why many GTA who opted for 5% has not yet cancelled the registration?

OK. If GTA has not yet cancelled the registration, they are supposed to raise GST invoice and in that they has to mention as yes for Question whether RCM applicable. But in one of my client, where there are many inward supplies from GTA, none of these GTA’s bill is in GSTR-2A with RCM yes. What and why is this happening in GTA industry.?

Regards,

Siva

[CHETAN PRAJAPATI]

If a Transporter, who has opted option as FCM and charged gst @ 12%, can out from option of FCM and take option of RCM as liability of payment of GST will arise to service receiver?

[KASTURI SETHI]

GTA can opt out of FCM in a new Financial Year that is 1st April for RCM scheme.

[Siva Rama]

Notification no 12/2017 CTR gives exemption for service provided by GTA, by way of transport in goods carriage of -

(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 ;

GST payable on GTA service on Forward Mechanism Basis

Example for (b)

In a goods carriage,

consignor A booked for consignee B Freight ₹ 600,

consignor C booked for consignee D Freight ₹ 400

consignor E booked for consignee F Freight ₹ 600

Aggregate Amount (600+400+600)= Rs 1600

Answer

GST payable by GTA (Forward mechanism)

Reason

Consideration charged in a single carriage exceeded ₹ 1500

Example for (c)

In a goods carriage

Consignor A booked for consignee Z Freight ₹ 600,

Consignor B booked for consignee Z Freight ₹ 200,

Aggregate Amount (600+200)= ₹ 800

Answer

GST payable by GTA (Forward mechanism)

Reason

Consideration charged for transportation of all such goods for a single consignee exceeded ₹ 750

Finding out aggregate amount as mentioned above (Rs 1600 and ₹ 800) is possible only from the point of view of GTA on Forward charge mechanism basis, because this data is available only with GTA, not in the hand of consignor/consignee who is the receiver of service.

GST payable on GTA service on RCM basis

If the service receiver (take consignor A of eg above) is liable to pay GST on RCM basis, then in

Case (b)

Consignor A does not know how many other consignments are going in the truck in which his goods have been loaded. Due to non availability of such information, he has to pay on safer side, GST on RCM even though his bill (Rs 600) is below ₹ 1500.

Case (c)

Consignor A does not know whether any other consignors are sending goods to the same consignee (Z) in the truck in which he has loaded his goods. Due to non availability of such information, he has to pay on safer side, GST on RCM even though his bill (Rs 600) is below ₹ 750.

My view poinnt

According to me this limit of ₹ 750/1500 have some sense only when we think from the view point of GTA who pays on FCM basis and not from the point of Service receiver who pays on RCM basis.

Then In such case every person whoever is paying freight charge to a GTA (even though it is Re1) has to take GST registration (Compulsory registration section 24CGST) if they are liable to pay for GST on RCM basis due to non-availability of information as I quoted above.

If what I have written above is totally wrong, experts please correct me.

[mohan sehgal]

Please resolve the ISSUE for Service Reciever;

This limit of ₹ 750/- for a single cosignment.....whether he should deposit GST under RCM or he is Exempted.

A consignment is sent to a consignee on Freight Paid basis and the GTA issues a consignment Note(G.R.) for ₹ 650/-only...Whether the Consignor should deposit GST under RCM basis or he is exempted under the ₹ 750/-Limit.

Thanks.

[Siva Rama]

Respected Mohan sehgal sir,

I am also confused on the same question.

I feel GST RCM has to be paid in your case.

Expert views awaited

[KASTURI SETHI]

The limit of ₹ 750/- of all such goods is for a single consignee and not for a single consignment. In a truck goods may be loaded of so many consignees but for the purpose of exemption, consideration for a single consignee should not exceed ₹ 750/-. Emphasis is on the words, "a single consignee" .

[KASTURI SETHI]

Dear Sir (Sh.Sehgal Ji),. In my view, it is exempted. It is not the intention of Govt.to tax below the limit of ₹ 750/- .

[mohan sehgal]

Thanks....

If the consignment note is more than ₹ 750/-....the service receiver has to deposit 5% GST under RCM..

Now.,what would be the place of supply if the material is despatched inter-state....To be more precise...The consignor .sends goods to its buyer(consignee)inter-state on Freight Paid basis..The GTA issues a Consignment note(G.R.) for ₹ 1200/- and collect the amount from the consignor...Now,the Consignor has to deposit GST under RCM on ₹ 1200/-....It should be deposited under CGST/SGST or IGST....The consignment is inter state but the Freight has been paid at the location of the consignor.

What should be the place for supply for GST paid under RCM(for GTA Services).??

In other words; the place of supply is the location of consignor or the location of the consignee ??

AI Summary

Understanding Forward and Reverse Charge Mechanisms in GST for Goods Transport Agencies: Key Rules and Registration Requirements A transportation business owner inquires about Forward Charge Mechanism (FCM) and Reverse Charge Mechanism (RCM) under the Goods and Services Tax (GST). Forum participants advise consulting the GST Act for specific queries and suggest consulting a tax expert for complex issues. It is clarified that a Goods Transport Agency (GTA) cannot mix FCM and RCM for different clients within the same financial year. The discussion also covers the conditions under which a GTA must register for GST, the implications of choosing 12% GST with input tax credit (ITC) versus 5% without ITC, and the exemptions for small consignments. The place of supply for GST purposes is determined by the location of the consignor.