5% WITH NO ITC - WHO WILL NOT TAKE ITC

[MUTHUKUMARAN K]

Dear Sir / Madam,

Transporter collect and pay 5% GST on transport charges from importers.Who will not take ITC Importer or Transporter? please explain.

with regards

K.Muthu Kumaran

9500098134

[Sadanand Bulbule]

GTA cannot avail  ITC since he has opted to charge 5%.

Importer can avail ITC of the 5% GST charged, if eligible.

[MUTHUKUMARAN K]

Dear Sir thanks for your valuable reply,

what are the benefit for GTA raise invoice 5% to Importer, because importer is ready to pay 12% or 18%.

but GTA only taken a ITC on rent , stationaory , Telephone charges and System Purchase.

please advise we bill to importer is 18% is better sir.

with regards

K.Muthu Kumaran

9500098134

 

 

[Sadanand Bulbule]

Since your input expenses are claimable and the importer agrees to pay 18% tax, it is better to bill at 18% rather than 5%. This enusres full ITC utilisation and no loss in revenue.

Nevertheless, 5% GTA rate is simpler compliance. No need of to maintain ITC chain on outward supply.

Choice is yours.

[MUTHUKUMARAN K]

Thanks for valuable reply

[KASTURI SETHI]

Yes, Sir. There is no requirement of  one-to-one correlation among inputs, input services and outward supply of goods (manufactured) & services in GST regime.

[Shilpi Jain]

GTA cannot take ITC. If transporter has significant ITC (vehicles, etc.) then he should consider charging 18% GST.

For importer, ITC will depend on what is he using the goods for - taxable or exempt supply.

AI Summary

Input tax credit: transporter charging reduced GST rate cannot claim ITC; recipient may claim ITC if eligible and using service for taxable supplies.
A transporter who elects to charge the concessional 5% GST on GTA services cannot claim Input Tax Credit; an importer charged that GST may claim ITC if eligible and using the service for taxable supplies. If the transporter has substantial input credits and the importer agrees to pay the higher rate, charging the standard GST rate to enable ITC recovery is commercially preferable, whereas the 5% option offers simpler compliance without maintaining an ITC chain.