Does GTA Services fall under Notification No.8/2017-Central Tax (Rate)?

Before we go and conclude on the topic “Does GTA Services fall under Notification No.8/2017- Central Tax (Rate)” first let’s understand what is reverse charge? where it is applicable along with in which cases it is exempted.

In the normal course of business, taxes are paid by the recipient of goods or services or both to the supplier of goods or services or both and the supplier, in turn, remits the amount of tax collected to the respective tax authorities. In case of reverse charge, the recipient will pay on behalf of the supplier of goods or services or both.  This is clearly defined in sub-section 98 of Section 2 of CGST Act

“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 subsection (4) of section 5 of the Integrated Goods and Services Tax Act;

The category of goods or services on which reverse charge is applicable is clearly defined sub-section (3)  of section 9 of CGST Act

The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

 Sub-section (4)  of section 9 of CGST Act defines clearly states that in case of supply of goods from unregistered taxpayers, the recipient should pay taxes.

The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Notification No.4/2017-Central Tax (Rate), clearly gives the list of goods on which reverse charge is applicable.

RS on Goods1

RS on Goods2
RS Goods_2

Notification No. 13/2017- Central Tax (Rate) provides the list of services under which reverse charge is applicable on the list of services under CGST Act.

RS Services 1

RS Services 2

From the above two notifications, it is clear that Reverse charge is applicable on all inward supplies of goods and services. Previously Reverse Charge was applicable only for the services and now under GST it is applicable for the goods also. As GST is a new and taxpayers who are registered under VAT in the erstwhile regime may or not may not be aware in all the states. In order to provide some ease of doing business, the government has given some exemptions for the applicability of Reverse Charge on inward supplies wide Notification No.8/2017-Central Tax (Rate), the same is given below

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017):

Provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds five thousand rupees in a day.

Now in the trade, one question which is asked very frequently is that is reverse charge exemption applicable on services like GTA, hamali charges or other freight charges paid by the taxpayers on day to day basis?

If we go through Notification No.8/2017-Central Tax (Rate), it is given for all the inwards supplies from unregistered tax payers by a registered taxpayer. So the above question does not arise that. If the inward supplies based on the above are below Rs 5000 in a day, then reverse charge is not applicable and benefit of the said notification can be taken.

If you have any different view, please share your views in the comments section so that it will be helpful for coming to a common understanding.

2 thoughts on “Does GTA Services fall under Notification No.8/2017-Central Tax (Rate)?

  1. Please refer the subject notification below.
    This notification specifically apply to only section 9(4) and doesn’t apply to section 9(3).

    So RCM exemption for below Rs 5000 is not available in case of GTA services.

    Thanks

    CA VINOD CHAURASIA
    9953587496

    [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE
    OF INDIA, EXTRAORDINARY]
    GOVERNMENT OF INDIA
    MINISTRY OF FINANCE
    (Department of Revenue)
    Notification No.8/2017-Central Tax (Rate)
    New Delhi, the 28th June, 2017
    G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the
    Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being
    satisfied that it is necessary in the public interest so to do, on the recommendations of the
    Council, hereby exempts intra-State supplies of goods or services or both received by a
    registered person from any supplier, who is not registered, from the whole of the central tax
    leviable thereon under sub-section (4) of section 9 of the Central Goods and Services Tax
    Act, 2017 (12 of 2017):
    Provided that the said exemption shall not be applicable where the aggregate value of
    such supplies of goods or service or both received by a registered person from any or all the
    suppliers, who is or are not registered, exceeds five thousand rupees in a day.
    2. This notification shall come into force with effect from the 1st day of July, 2017.
    [F.No.354/117/2017-TRU]
    (Mohit Tewari)
    Under Secretary to the Government of India

    Liked by 1 person

    1. Section 9(4) is stated clearly in Notification 8, here the question is reverse charge is applicable only in case of inward services from non registered tax payers. If a service provider is a GTA, then he may not take registration under GST, as it is not mandatory GTA to take registration, it means that said provisions of Section 9(4) are also applicable for GTA. There is also a note issued by the Mumbai / Bombay Transport corporation that it is not mandatory to take registration under GST.
      Serial number 18 of CGST Rates notification clearly talks about GTA, nothing but the list of services under which reverse charge is applicable.
      Notification 11 explains GTA as “Explanation.- “goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.” here also it does not talk about registration under GST for GTA being mandatory, it means it is optional.

      Like

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