RCM on GTA

[VIGNESH]

Sir.Kindly clarrify, One of my client hires vehicle on regular basis From Mr.A to deliver his goods, Mr.A issues a bill just specifying distance covered with place of delivery and takes his charges and collects his charges monthly and my client has deducted TDS will it be covered under GTA and RCM attracts? or Hire Charges where RCM not apply!

[KASTURI SETHI]

Sh.Vignesh Ji,

'A' is GTO and NOT GTA. No RCM is applicable.

Have you perused the decision/order dated 17.9.2020 of AAAR, Maharashtra in reference to Liberty Translines - 2020 (9) TMI 1104 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ?

[Padmanathan KV]

It appears that the responsibility of the goods continues to remain with your client even during the transport, i.e., Mr.A does not undertake the responsibility of goods during its transport. Therefore, it is hire charges in my opinion and not liable to RCM.

[GUNASEKARAN K]

Dear Mr.Vignesh,

Kindly ensure the Transporter issues Consignment Note / LLR which contains the details of description of Goods, Sender & Receiver then it will termed as GTA service which liable to pay GST under RCM by your client.

AI Summary

Clarification on whether vehicle hire for goods delivery by Mr. A is subject to RCM under Goods Transport Agency rules. A client regularly hires a vehicle from Mr. A for goods delivery, with Mr. A issuing a bill based on distance covered. The client deducts TDS, and there is a query about whether this falls under Goods Transport Agency (GTA) and if Reverse Charge Mechanism (RCM) applies. Three responses were provided: one states Mr. A is a Goods Transport Operator (GTO), not a GTA, so RCM doesn't apply; another suggests it's hire charges since Mr. A doesn't assume responsibility for the goods, thus not liable to RCM; the third advises ensuring a consignment note is issued to determine if it's a GTA service subject to RCM.