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ITC on RCM against GTA Services payment.

Rajiv Ranjan Jha (Sr. Accountant) (68 Points)

11 July 2017

Respected Sir,

We are relating to manufacturing unit and our unit has registered under GST Act 2017.

Sir; our question is that; we are paying of freight charge to Transport Agency and provision of tax against RCM. Then; can we eligible for ITC? Yes or No.

Please clarify rule of ITC on RCM against GTA Services for manufacturer taxpayers.

Thanks.

RAJIV RANJAN JHA

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6 Replies

Rounak Varshney (Business) (276 Points)
Replied 12 July 2017

Mr.Rajiv, if goods transport agency provides services to person who belongs to organised sector then rcm will apply (otherwise normal charge will apply) Recipient will be liable to pay tax @ 5% under reverse charge mechanism, however no ITC will be available to recipient.

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Tabarak Husain (Student) (52 Points)
Replied 12 July 2017

If we going through rate of services notified on 28th June 17, the condition for non-availability of inputs is service provider not for receiver.

hence in my opinion, input available to recipient for RCM paid on GTA.

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Rounak Varshney (Business) (276 Points)
Replied 12 July 2017

As per Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017, which you are refering it does not state any information on ITC, it states the services on which tax will be paid by service receiver in RCM.

However as per SCHEDULE OF GST RATES FOR SERVICES AS APPROVED BY GST COUNCIL on 19th May 2017, it states that In case of GTA Service, tax rate is 5% with no ITC.

Attached File : 1932201 20170712134521 schedule of gst rates for services.pdf downloaded: 152 times

Tabarak Husain (Student) (52 Points)
Replied 12 July 2017

Sir please refer notification number 11/2017 issued on 28.06.17 under central tax (rate).
under this notification please read

S.No. 9 clause (iii). please read in column iv i.e. condition for rate.

condition says that
" Provided that credit of input tax charged on goods and services used in supplying the service has not been taken"

please also read explanation iv.

after combine reading the intention of legislature prohibtion on input only i.e.
input use for supplying this services not for input of GTA. so it is apply to service provider only.

the reference you are given is.. proposed rate by gst council which was not notified under the act.

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Rounak Varshney (Business) (276 Points)
Replied 12 July 2017

Mr. Husain, you should you should take combined reading of both notification 11/2017 & 13/2017.

In Both notification no where provides that ITC of GTA Services is available to Service receiver on tax paid in RCM.

If you have any notification or circular which states that ITC is available to Service receiver in RCM.

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Tabarak Husain (Student) (52 Points)
Replied 12 July 2017

Sir,
Notification 13/2017 under central tax rate is for list of notified services on which RCM applicable.

please don't get confuse with draft rate issued by gst council in which mentioned rate 5% with no itc.
Since as earlier under service tax abatement no input condition is also only for service provider.

Further, to know whether particular input tax credit is available or not, first we have go to the act. U/s 16 of cgst act, it is eligible since it is not excluded under any section from 16 to 21.

and for manufacturer there is no such place of removal concept under gst.

so for manufacturer input on inward and outward both available.

conditions given under rate is only for persons providing such services not for persons receiving the services.

So no notification or circular required for eligibility under input credit.

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