RCM-GTA-5% - ITC ELIGIBILITY

[Govinda Raju]

Hi,

Can we have clarification as to RCM paid at 5% on GTA is eligible ITC or ineligible ITC.

on the other hand if GTA entity pays GST at 5% and appearing in GSTR-2B - are we eligible for ITC credit.

[KASTURI SETHI]

Sh.Govinda Raju Ji,

W.e.f. 18.7.22, the option to pay GST @ 5% without ITC under forward charge mechanism by GTA was introduced. Prior to 18.7.22, the only option was to pay GST @ 12 % with ITC by GTA under FCM.

For more details see Issue ID 117765 dated 22.1.22 which was raised by you.

[Sadanand Bulbule]

Dear Sir

It appears the dark clouds surrounding this issue are not yet dispersed, despite thoughtful clarification.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, If the dark clouds still persist, then the querist may apply to the jurisdictional AAR for further clarification on a specific problem/issue.

[Sadanand Bulbule]

Dear Sir

AAR is an expensive and time consuming process and the final product is the same.

[Shilpi Jain]

For you to take credit or be eligible to take credit, it does not matter the rate of tax that you pay for your expenses.

Hence, if you are providing taxable supplies you would be eligible to take ITC.

[Tarun Agarwalla]

in both cases you are eligible I endorsed the view of Silpi Jain Madam.

AI Summary

Input tax credit eligibility for reverse charge on goods transport agency services affirmed despite supplier opting reduced rate
The core point: since 18.7.22 a GTA may elect a reduced-rate forward charge option without taking ITC, whereas previously GTAs paid at a higher rate with ITC; recipient entitlement to input tax credit depends on the recipient's taxable supplies and statutory ITC conditions rather than the supplier's chosen rate, and recipients remain generally eligible to claim ITC if conditions are met, though specific factual uncertainty may warrant an advance ruling.