SUNIL SINGLA

[Sunil Singla]

SIR

ONE OF OUR CLIENT IS GTA HAS SHIFTED HIM/ITSELF FROM RCM TO FCM

NOW HIS QUERY IS THAT HE IS CHARGING FREIGHT FROM TWO TYPES OF CUSTOMERS: ONE IS INDUSTRIALIST OTHER IS FURTHER GTA. HIS QUERY IS THAT WHETHER HE HAS TO CHARGE GST FROM GTA OR NOT . WHETHER GTA TO GTA SERVICES ARE EXEMPTED SERVIES OR NOT.

REGARDS ALL

SUNIL SINGLA

[DR.MARIAPPAN GOVINDARAJAN]

What type of service is rendered between these two GTAs.

[KASTURI SETHI]

No exemption from GTA to GTA is available. Your client is providing service of GTA under Forward Charge Mechanism. So it is his responsibility to collect GST on freight and deposit with the Govt. Under RCM, a person who bears the freight, is liable to pay GST on the amount of freight. This legal status is same irrespective of the fact whether it is pre-GST era or post-GST regime. However, if one GTA hires truck from your client, that is exempted. Under RCM first liability is either of Consignor or consignee and thereafter, liability is of GTA but under FCM GTA's liability comes first. For GTA working under FCM, an other GTA is a routine Service Receiver. Hybrid mechanism if adopted by GTA can create problem. GTA should either work under FCM or RCM.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Sri Sethi.

[KASTURI SETHI]

Dr.Govindarajan Sir, Thanks a lot for your support. A support from a learned person matters a lot to me. Really it is moral boosting for me, especially, in view of the time taken and pondered over again and again on a unique question.

[DR.MARIAPPAN GOVINDARAJAN]

Sethi sir,

Actually I learnt a lot. You were in the department and you must have vast experience. Being an officer in BSNL my expertisation is only on service tax matters.

[KASTURI SETHI]

An extract of GST Council Meeting held on 5.8.17, option has to be given for providing GTA service under Forward Charge Mechanism

S.No.8 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)

AI Summary

GTA service under forward charge: GST must be charged to other GTAs; no blanket GTA-to-GTA exemption.
GTA services under Forward Charge Mechanism require the GTA to collect and remit GST on freight from all recipients, including other GTAs, with no general GTA-to-GTA exemption; hiring a truck from another GTA is an exempt transaction. Under RCM initial liability is with consignor/consignee and then GTA, while under FCM the GTA is primarily liable. A GTA must elect either FCM or RCM consistently. The GST Council allowed GTAs to opt at the start of the financial year for forward charge with full input tax credit or an alternative lower-rate option without input tax credit.