GST Registration_RCM TO Forward Charge

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This query is : Resolved

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A transport business registered in October 2022 is currently issuing invoices under the Reverse Charge Mechanism (RCM). They plan to purchase a new vehicle and wish to claim Input Tax Credit (ITC) on it, subsequently issuing invoices under the Forward Charge mechanism. The discussion clarifies that a Goods Transport Agency (GTA) can only choose one tax payment option (RCM or Forward Charge) per financial year. Therefore, switching to Forward Charge and claiming ITC on a vehicle purchased within the same financial year (FY 22-23) is not permissible.

Dipesh

Dipesh (Querist)
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30 December 2022 Hello Expert,

One of our vendor is in Transport industry, he taken registration in the month of October-2022 & issuing invoices in RCM category. Now he is in planning to purchase new vehicle & want to claim ITC on this vehicle & issue invoices in Forward Charge. What compliance need to maintain in this case. When he can start Forward Charge invoice & what % of tax applicable ??

Please share any provision or base under law.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 December 2022 The option once chosen would be valid for a financial year and a GTA cannot shift to a different option in a same financial year i.e., a GTA can either opt for paying taxes under forward charge mechanism (under either rate) or under reverse charge and not both for same financial year.

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Dipesh

Dipesh (Querist)
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31 December 2022 CA R Seetharaman Sir, Agree with your reply, but suppose he is buying new vehicle in this FY i.e. 22-23 till March 22, can he eligible to avail ITC ???

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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31 December 2022 No, he is not eligible to avail ITC.

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Dipesh

Dipesh (Querist)
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31 December 2022 Thank You Sir for your valuable reply.

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