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Advisory on opting for payment of tax under the forward charge mechanism by a Goods Transport Agency (GTA)

Recently GSTN team issued an advisory relating to option for payment under forward charge mechanism by GTAs. As per the Notification No. 03/2022-Central Tax (Rate), dated 13th July 2022, an option is being provided on the portal to all the existing taxpayers providing Goods Transport Agencies Services, desirous of opting to pay tax under the forward charge mechanism to exercise their option.

Extracts of Notification No. 03/2022-Central Tax (Rate)

Option Exercised

Output Tax Rate

Input Tax Credit Availability

A.) GTA exercises the option to itself pay GST on services supplied by it.

 

5% IGST or

2.5% CGST SGST Each

GTA shall not take credit of input tax charged on goods and services used in supplying the service.

Or

 

12% IGST or

6% CGST SGST Each

GTA may take credit of input tax charged on goods and services used in supplying the service.

B.) GTA does not exercises the option to itself pay GST on services supplied by it.

 

Output tax is to be paid under RCM by the recipient of the services.

GTA shall not take credit of input tax charged on goods and services used in supplying the service.

 

Above option to itself pay the GST by GTA on the services supplied by it during a Financial Year shall be exercised by making a declaration in Annexure V on or before the 15th of March of the preceding Financial Year.

Option in Annexure V FORM is required to be submitted on the portal by the Goods Transport Agencies every year before the commencement of the Financial Year and the option once exercised cannot be withdrawn during the year. Annexure V has been made available on the portal for GTA’s to exercise their option for the Financial Year 2023-24, which would be available till 15th March 2023.

They can navigate Services > User Services > Opting Forward Charge Payment by GTA (Annexure V), after login, to submit their option on the portal.

The advisory can be viewed at: - Goods & Services Tax (GST) | News and Updates

Disclaimer: The facts and opinions written in this article are truly based on the relevant provisions and information available at the time of preparation. The article does not constitute any professional advice or a formal recommendation. The author has undertaken the utmost care to disseminate true and correct views and does not accept liability of any errors or omissions.

Posted by: Admin

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