GTA Services and ITC

[Kaustubh Karandikar]

The Goods Transport Agency (GTA) had charged 5% GST in the invoice against transportation charges to XYZ Ltd. XYZ had claimed input tax credit against this. 1) Whether XYZ is eligible to claim such ITC? 2) If not, what is the correct procedure? I my view, XYZ can claim ITC only when the GTA is charging 12% GST. But no reverse charge to XYZ if GTA charging 5% GST. Views of the experts please.

[Shilpi Jain]

RCM would be applicable for XYZ, since the GTA would satisfy the condition in the RCM notification of being a person who has not paid tax @ 12%.

So suggested that XYZ recovers the 5% tax from GTA and pays to department (along with interest if late paid).

If this is not possible, XYZ would still be eligible for the GST paid to supplier as it falls under the def of ITC under GST.

[KASTURI SETHI]

I support the views of Madam Shilpi Jain.

[Ganeshan Kalyani]

Sir, recipient of GTA service is eligible to take ITC in both cases i.e. GTA charging 5% or 12% GST on invoice.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Your understanding, interpretation, analysis and viewpoint are absolutely correct.

[Shilpi Jain]

Agreed. Somehow the trade and industry seems to have a doubt whether they will be eligible for credit as recepient.

The restriction of credit is only for the service provider GTA if the recipient is paying GST @5% under RCM.

AI Summary

Input tax credit eligibility for GTA services affirmed even when supplier charges concessional rate, with reverse charge implications. The recipient is entitled to claim ITC on GTA services whether the GTA charges a concessional rate or the standard rate; where the supplier has not discharged tax at the higher rate, the RCM may require the recipient to pay tax under reverse charge and to regularise payment (including recovering tax from the supplier or paying the department with interest).