GST Input Credit

[Ethirajan Parthasarathy]

A goods transporter has charged ₹ 600/- for transport of goods & has also issued consignment note. Though the amount charged is below 750/- (threshold limit prescribed), the registered person pays tax under RCM. Is he eligible to take input credit.

[KASTURI SETHI]

Yes. He is eligible to avail ITC under RCM.

[Ganeshan Kalyani]

Yes, input tax credit is allowed on GTA.

[Ethirajan Parthasarathy]

I am thankful to the response by the experts. I regret a mistake has crept in my query which has altered the very concept. My query is about ITC on freight charges (which is not supported by consignment note) paid under RCM. Please see my rephrased query :

A goods transporter has charged ₹ 600/- for transport of goods & has not issued consignment note. Though the amount charged is below 750/- (threshold limit prescribed), the registered person pays tax under RCM. Is he eligible to take input credit.

[PAWAN KUMAR]

Dear Sir,

As per my view, since goods transporter has not issued consignment notes and as per definition under the gst law, it is not under GTA hence not liable for GST under RCM.

Secondly if any case it cover under GTA, then, gross amount charged for consignment is under ₹ 750, hence it is exempt.

in both the cases above, as per my view, GST will not payable.

[KASTURI SETHI]

With the rephrasing of query, the whole scenario has changed. I support the views of Sh.Pawan Kumar Ji.

[SIVARAMA KUMAR]

Only a registered dealer is eligible to claim ITC on RCM. if used for his taxable business or furtherance of business activity.The threshold limit of 750 per consignee is exempted only in the hands of the supplier of service,which you were not aware. The provisions of the act casts the liability to pay tax under RCM for the recipient of service ,and no provisions restrict claim of ITC paid under RCM paid on exempted supplies.

My view is that you would still be eligible to claim ITC.,

[Ganeshan Kalyani]

To claim ITC the outward supply should be taxable. RCM paid on GTA should be toward taxable supply I.e. supply of taxable goods.

AI Summary

Input tax credit eligibility on reverse charge: recipient may claim ITC when RCM paid for taxable supply
Claiming input tax credit on freight taxed under reverse charge depends on whether the transport service qualifies as a taxable Goods Transport Agency and whether the recipient is a registered person using the input for taxable outward supplies. If the service is not a GTA (for example, no consignment note) the supplier may not be chargeable as a GTA; if the supplier is exempt under the supplier-side threshold, that affects the supplier's liability but does not by itself prevent a registered recipient who pays tax under reverse charge from claiming ITC, provided the recipient's use is for taxable business.