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1. What is the ambit of Goods Transport Agencies and who all are covered within their ambit?

Notification No. 11/2017-Central Tax (Rate) defines Goods Transport Agencies( Herein referred to as GTA) as “ any person who provides service in relation to transport of goods by road and issues a consignment note, by whatever name called.”  

Elaborating on the definition of GTA, it only includes transportation through road and must issue a consignment note. Further it also  means that it does not include transportation through rail, ship, cargo, sea or air transportation etc and also those transport operators who do not issue.

2. What is the change in the taxability for the Goods Transport Agencies by the virtue of the recent amendments?

Prior to the amendment, the taxability of the GTA was covered under the ‘reverse charge’, in which case the customer who received the services were liable to pay the tax at the rate of 5%. Later in 2017, GTA was given an option to charge ‘forward charges’ to the customer  at the rate of 12%. However, option once chosen has to be consistently followed and there could not be a shift between the options.

In the 47th Meeting of GST Council, a notification has been issued which will have effect from 18th July 2022, wherein the GTA have the following options for taxability, such as:

Option 1: Opting Reverse Charge: 

Applicable Tax Rate:5 %

Conditions: a. Tax to be paid by the recipient of services under RCM.  

b. The credit of input tax charged on goods and services used in supplying the service has not been taken by GTA.  

Option 2: Opting Forward Charge: 

Applicable Tax Rate:5 % or 12%

Conditions: a.ITC is eligible, where GTA’s pay tax @ 12%,  

b. ITC on goods or services used is not eligible where GTA pay tax @ 5%. 

c.No need to pay liability under RCM in both the cases by recipient of services. 

3. What are the timelines for choosing the options for the Financial Year 2022-23?

In order to exercise your options for taxability, it must be done before 16th August 2022.

4. What happens in the cases where the declaration of the option is not submitted before 16th August 2022?

If the Goods Transport Agency(GTA) does not submit the declaration of the option for taxability before 16th August 2022, then it would be deemed that the GTA has opted for taxability under reverse charge. This option to pay tax cannot be changed during the FY 2022-23. The person cannot choose multiple options in one financial year.

5. What is required to be given in the declaration?

As per the notification Notification No. 03/2022- Central Tax (Rate) dated 13-07-2022, the GTA opting to pay tax under forward charge needs to give declaration to the jurisdictional GST authorities expressing their intent of choosing the option. The format of the declaration has been annexed to the notification itself. This declaration has to be a physical submission to the jurisdictional GST Authority

6. Is there a requirement of separate declaration of options each financial year?

Yes, as per the notification, the declaration has to be given for each of the financial years. Further, the declaration is to be given separately for each GST number as each GSTIN constitutes a separate distinct person as per the GST law. A separate acknowledgment has to be obtained from each GST authority as they have different jurisdictions for each GSTIN.

7. In the case where the GTA has opted for taxability under the reverse charges or forward charges, how would the recipient come to know?

In case a GTA opts to pay tax under forward charge, then it would charge tax on the invoice which itself acts as evidence that the GTA is covered under forward charge and that the recipient is not required to pay tax under RCM.  

8. Whether the GTA can use the same truck for both 5% and 12% business?

The law does not restrict the usage of capital goods for either of the businesses. Hence, the GTA can use one single truck for the supplies of service for both 5% and 12% business.

9. Whether a GTA operating for multiple states, can opt for FCM for some registration number and RCM for other registration number?

Where a GTA is working for multiple states, it has the option to choose FCM (both under 5% and 12%) for some GSTIN whereas RCM option for other GSTIN. Further, in case FCM has been opted  for a particular GSTIN, GTA will have the option to charge 12% or 5% as the case may be on each of the transactions.

10. What happens in those cases where the supply is wrongly assessed under reverse charge, while it is taxable under forward charge or vice-versa?

In those cases where the GTA has been wrongly assessed, such as where the transactions are liable under reverse charge, while the same is taxable under forward charge or vice-versa, then the GTA can cancel the original invoice and issue a new invoice if the correction is carried out in the same month.