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

Reverse charge mechanism on goods transport: liability hinges on whether the supplier assumes custody via consignment note, making it GTA. RCM applies if the transporter issues a consignment note/LLR and assumes responsibility for goods, characterising the supply as a GTA, making the recipient liable under reverse charge; if the hirer retains responsibility and the supplier only provides vehicle hire (GTO/hire charges), RCM does not apply.