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Gta tax 5% and reverse charge

Shashi (Accounts Executive) (27 Points)

04 March 2019

Hi can any one guide me in following doubt.

In case of GTA there ar two options, one is to pay tax @ 5% without ITC and another option is to pay tax @ 12% with ITC.

It has been notified applicability of reverse charge u/s 9(3), if tax not paid @ 6% (i.e. 12%).

In plain reading reverse charge is applicable if tax not paid @ 12 on GTA services. GTA has to py tax @ 5%.

What is the tax rate applicable to recipient of service under RCM.

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10 Replies

CA.Pankaj Rawat (Chartered Accountant) (1381 Points)
Replied 04 March 2019

Recipient is required to pay GST @ 5% on Reverse Charge Mechanism and of course the Recipient is allowed to take Input Tax Credit (ITC) subject to general eligibility criterion.

Shashi (Accounts Executive) (27 Points)
Replied 04 March 2019

Thanks Rawat for your reply

A registered GTA operator can opt for not to claim ITC.

CA.Pankaj Rawat (Chartered Accountant) (1381 Points)
Replied 04 March 2019

yeaah GTA can opt for either (1) Pay GST @ 5% ,in this case GTA is not allowed to take ITC. (2) PAY gst @ 12%,tn this case GTA is allowed to take itc.However once option to pay GST @ 12% IS Exercised and itc is availed than other option cannot be exercised.

Shashi (Accounts Executive) (27 Points)
Replied 04 March 2019

Thanks Rawat,

If GTA opt to pay 5%, in this scenario also reverse charge is applicable?

CA.Pankaj Rawat (Chartered Accountant) (1381 Points)
Replied 04 March 2019

No,Reverse charge is applicable only if GTA provides services to the specified category recipients. than recipients are liable to pay GST @ 5%.if GTA provides services to other than specified category recipients than GTA have 2option (5 or 12%).

CA.Pankaj Rawat (Chartered Accountant) (1381 Points)
Replied 04 March 2019

specified category persons (a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or (b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or (c) any co-operative society established by or under any law; or (d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or (e) any body corporate established, by or under any law; or (f) any partnership firm whether registered or not under any law including association of persons; or (g) any casual taxable person.

Brijesh S (Student ) (70 Points)
Replied 04 March 2019

Dear Shashi,

This is my opinion for the query,

RCM is dealt with Section 9(3) and 9(4) of the CGST Act and Section 5(3) and 5(4) of the IGST Act.

Notification 13/2017 brought GTA services into the ambit of RCM.

Notification 11/2017 later amended by Notification 20/2017 , provided the rate of GST under RCM.

On a fair reading of the law, we understand as below:

As per Section 2(98) of the CGST Act 2017.

“reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act.

Based on the above we understand that RCM brings all responsibility of GST onto Service Recipient as though he is the provider of service.

Hence, if GST is paid under RCM, we need to refer to Notification 13 , and Notification 20 and the following construction is arrived:

Option 1: Pay GST at 5% under RCM and do not claim Input of the same.

Option 2: Pay GST at 12% under RCM and Claim Input of the same.

Also note the relaxation limit of Rs.750/1500.

Shahadat Khan (5 Points)
Replied 07 September 2019

Originally posted by : Brijesh S
	Dear Shashi, This is my opinion for the query, RCM is dealt with Section 9(3) and 9(4) of the CGST Act and Section 5(3) and 5(4) of the IGST Act. Notification 13/2017 brought GTA services into the ambit of RCM. Notification 11/2017 later amended by Notification 20/2017 , provided the rate of GST under RCM. On a fair reading of the law, we understand as below: As per Section 2(98) of the CGST Act 2017. “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act. Based on the above we understand that RCM brings all responsibility of GST onto Service Recipient as though he is the provider of service. Hence, if GST is paid under RCM, we need to refer to Notification 13 , and Notification 20 and the following construction is arrived: Option 1: Pay GST at 5% under RCM and do not claim Input of the same. Option 2: Pay GST at 12% under RCM and Claim Input of the same. Also note the relaxation limit of Rs.750/1500.

Shahadat Khan (5 Points)
Replied 07 September 2019

Originally posted by : Brijesh S
	Dear Shashi, This is my opinion for the query, RCM is dealt with Section 9(3) and 9(4) of the CGST Act and Section 5(3) and 5(4) of the IGST Act. Notification 13/2017 brought GTA services into the ambit of RCM. Notification 11/2017 later amended by Notification 20/2017 , provided the rate of GST under RCM. On a fair reading of the law, we understand as below: As per Section 2(98) of the CGST Act 2017. “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act. Based on the above we understand that RCM brings all responsibility of GST onto Service Recipient as though he is the provider of service. Hence, if GST is paid under RCM, we need to refer to Notification 13 , and Notification 20 and the following construction is arrived: Option 1: Pay GST at 5% under RCM and do not claim Input of the same. Option 2: Pay GST at 12% under RCM and Claim Input of the same. Also note the relaxation limit of Rs.750/1500.