Rcm
This query is : Resolved
10 July 2017
Suppose for example there are two registered dealer for GTA services MR A & MR B - Both are registered and provide GTA services
Now GTA is under RCM
Now MR A provides GTA services to MR B
Now Mr B has to pay GST under RCM
But he cannot claim that input as he also provide GTA services which is under RCM.
So will MR B get refund for GST paid under RCM for services received by him From Mr A
Now GTA is under RCM
Now MR A provides GTA services to MR B
Now Mr B has to pay GST under RCM
But he cannot claim that input as he also provide GTA services which is under RCM.
So will MR B get refund for GST paid under RCM for services received by him From Mr A
10 July 2017
Mr B will not get refund of GST paid under RCM, Even Mr .B caanot claim ITC of such GST against his output tax liability if occur any time (i.e. in case of GTA service to unregistered dealer). Because GTA services is liable of GST at rate 5% with no ITC.
Further, if you no claiming ITC against your output liability it does not mean you can refund such ITC ( in specified cases it is allowed like export case).
Further, if you no claiming ITC against your output liability it does not mean you can refund such ITC ( in specified cases it is allowed like export case).
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10 July 2017
Soo what about registration incase of Mr BGst registration is compulsory if tax has to be paid by the recipient and Mr B doesn't own any truck or any vehicle he just takes good from the party charges transportation charges to him and then appoints a gta to transport the goods.So Mr b has to register in gst eventhough his turnover is less than 20L??Thnks 😄
20 July 2025
This is a nuanced situation under GST Reverse Charge Mechanism (RCM) as it relates to GTA (Goods Transport Agency) services. Let’s clarify the scenario and your questions step-by-step:
✅ Key Situation Recap:
Mr. A and Mr. B are both registered dealers providing GTA services.
GTA services are covered under Reverse Charge Mechanism (RCM).
Mr. A provides GTA service to Mr. B.
Mr. B in turn provides GTA service to the final recipient.
Mr. B does not own any trucks, and acts more like a freight aggregator/contractor.
Mr. B's turnover is < ₹20 lakhs.
🧾 Q1: Does Mr. B need to pay GST under RCM for service received from Mr. A?
✅ Yes, as per Notification No. 13/2017 – Central Tax (Rate), GTA services are covered under RCM when supplied to a specified category of persons, including a registered person.
➡️ So, if Mr. B is registered, he must pay GST under RCM when he receives GTA services from Mr. A.
🧾 Q2: Can Mr. B claim ITC (Input Tax Credit) of GST paid under RCM?
✅ Yes, but only if:
Mr. B uses the GTA services for supplying taxable output services, AND
He is charging GST on forward charge basis for the services he provides.
❌ If Mr. B is also supplying GTA services under RCM, he cannot claim ITC, because RCM supply is exempt from tax on his part (as he does not charge GST on outward supply).
➡️ Therefore, no ITC if Mr. B continues to supply GTA services under RCM model.
🧾 Q3: Can Mr. B claim refund of RCM paid?
❌ No, there is no refund of RCM paid when input tax credit is not available or not eligible (e.g., for making exempt supplies).
RCM is a cost to Mr. B in this situation if he can't take ITC.
🧾 Q4: Is Mr. B required to register under GST even if turnover < ₹20 lakhs?
✅ Yes, if he is liable to pay GST under RCM, as per Section 24 of the CGST Act, 2017:
Persons who are liable to pay tax under reverse charge are mandatorily required to register, irrespective of turnover.
So, Mr. B must register, even though his turnover is < ₹20 lakh, if he is paying tax under RCM.
🔄 Practical Way to Avoid Double RCM & Loss of ITC:
Mr. B can opt to charge GST under Forward Charge on his outward GTA services (at 12% with full ITC).
Then he can claim ITC of RCM paid on input services (from Mr. A).
However, once forward charge is opted, he must charge GST on all GTA services.
✅ Key Situation Recap:
Mr. A and Mr. B are both registered dealers providing GTA services.
GTA services are covered under Reverse Charge Mechanism (RCM).
Mr. A provides GTA service to Mr. B.
Mr. B in turn provides GTA service to the final recipient.
Mr. B does not own any trucks, and acts more like a freight aggregator/contractor.
Mr. B's turnover is < ₹20 lakhs.
🧾 Q1: Does Mr. B need to pay GST under RCM for service received from Mr. A?
✅ Yes, as per Notification No. 13/2017 – Central Tax (Rate), GTA services are covered under RCM when supplied to a specified category of persons, including a registered person.
➡️ So, if Mr. B is registered, he must pay GST under RCM when he receives GTA services from Mr. A.
🧾 Q2: Can Mr. B claim ITC (Input Tax Credit) of GST paid under RCM?
✅ Yes, but only if:
Mr. B uses the GTA services for supplying taxable output services, AND
He is charging GST on forward charge basis for the services he provides.
❌ If Mr. B is also supplying GTA services under RCM, he cannot claim ITC, because RCM supply is exempt from tax on his part (as he does not charge GST on outward supply).
➡️ Therefore, no ITC if Mr. B continues to supply GTA services under RCM model.
🧾 Q3: Can Mr. B claim refund of RCM paid?
❌ No, there is no refund of RCM paid when input tax credit is not available or not eligible (e.g., for making exempt supplies).
RCM is a cost to Mr. B in this situation if he can't take ITC.
🧾 Q4: Is Mr. B required to register under GST even if turnover < ₹20 lakhs?
✅ Yes, if he is liable to pay GST under RCM, as per Section 24 of the CGST Act, 2017:
Persons who are liable to pay tax under reverse charge are mandatorily required to register, irrespective of turnover.
So, Mr. B must register, even though his turnover is < ₹20 lakh, if he is paying tax under RCM.
🔄 Practical Way to Avoid Double RCM & Loss of ITC:
Mr. B can opt to charge GST under Forward Charge on his outward GTA services (at 12% with full ITC).
Then he can claim ITC of RCM paid on input services (from Mr. A).
However, once forward charge is opted, he must charge GST on all GTA services.
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