RCM - Freight paid by a registered GTA to another GTA

[gvenugopal g]

Dear Experts,

Freight paid by a registered GTA (on behalf of customers) to another GTA and that amount will be collected along with service charges from their customers by charging GST @12%. TDS under section 194C of Income Tax is not applicable on freight paid if the GTAs having less than ten vehicles during the year.

Kindly clarify, whether RCM is applicable to a registered GTA for the above freight.

Thanks.

[KASTURI SETHI]

A person who actually bears the freight will come under RCM. This was also the legal position in pre-GST era. GTA mechanism remains the same.

[KASTURI SETHI]

In continuation to my reply, I mean to say either consignor or consignee.

[gvenugopal g]

Dear Sir,

Thank you very much for your replies. In our case the Consignee is unregistered GTA and Consignor is a corporate entity, and we are the registered GTA clears the consignment on behalf of Consignor. Kindly let us know the rate of GST under RCM if freight will be paid by us or by the service receiver.

[KASTURI SETHI]

Your firm is working for and on behalf of corporate body. The corporate body will bear freight. So FCM is applicable.

AI Summary

Reverse charge mechanism: registered GTA bears GST when it pays freight on behalf of consignor; payer liable.
The reverse charge mechanism applies to the person who actually bears the freight cost; either consignor or consignee may be liable. In the given facts, a registered GTA clears consignments on behalf of a corporate consignor and the corporate body is treated as bearing the freight, so the RCM liability rests with the corporate payer rather than the clearing GTA.