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 Inapplicable: Corporate Entity Bears Freight, Forward Charge Mechanism Applies Instead for GTA Transactions. A registered Goods Transport Agency (GTA) queries about the applicability of Reverse Charge Mechanism (RCM) when freight is paid by one GTA to another on behalf of customers. The freight charges, along with service fees, are collected with a 12% GST. It is clarified that RCM applies to the party bearing the freight costs, typically the consignor or consignee. In this case, since the consignee is an unregistered GTA and the consignor is a corporate entity, the corporate entity bears the freight, making Forward Charge Mechanism (FCM) applicable instead of RCM.