From July 2022 the GST rates charged over GTA from the central board of indirect taxes and customs had been reduced. The forward option led the agencies to pay 5 or 12 per cent of tax. If the agency has registered under the CGST Act of 2017, they are applicable for the exemption. The make in India policy urges the government to encourage export, intra-state and interstate activities. The location of the supplier and place of supply decide the tax rates. Suppliers and transport agencies are entitled to pay tax for the goods. The blog engages the readers with interesting information worth sharing to understand the GST rates in India.
Meaning of goods transport agencies:
GTA transport the goods from one place to another. The core service of GTA is good’s transportation. The ancillary services of GTA are loading or unloading, packing or unpacking, trans-shipment, and temporary warehousing.
CGST and SGST rates:
GTA is not required to register under GST. The business houses receiving the service of GTA are liable to pay the reverse charge. The following entities are liable to pay a reverse charge under GTA: factory, society, a co-operative society, a body corporate, a GST registered person, a partnership firm and a taxable person. Depending upon the consignor and consignee relationship the payment of GST differs. As the transportation of goods operates in an unorganised sector, GTA companies are excluded from the tax implication. For the GTA Companies, the CGST rate is 2.5 per cent. SGST rate is charged as 5 per cent or 12 per cent. SGST and CGST both fall under the intra-state supply. The authorities that collect SGST, CGST, and UTGST are the state government, central government and union government. IGST is the inter-state transaction shared by the state and central government. If the location of the supplier, buyer and goods supply are in the same state, it is an intra-state transaction. If the location of the supplier and goods supply are different. It is named inter-state supply. Here the seller collects the IGST from the buyer. The concept behind the collection of SGST, CGST and IGST is to benefit all the states of India and the central government. GST is structured based on the nature of transactions and tax collection. It is essential to understand the GST concept to group the tax-related transactions under the respective head.
What is ITC?
The input tax credit is the tax used by the taxpayer if it is included in the CGST ACT and SCST act. The credit on all three taxes is used against the tax liability. The credit from IGST and CGST is added to the CGST act. The credit from IGST and SGST is not counted as SGST. Cross utilisation of tax is applicable only for certain processes. To claim ITC, the taxpayer needs to submit the documents such as debit notes and tax invoices. The taxable person has the responsibility to receive the goods and services. The tax is paid as a credit to the central or state government. The tax return details should be furnished by the payer. The last lot in the instalment includes the credit of the taxpayer. The last date to claim the credit is one year from the date of issue of the invoice.
What is a consignment note?
Goods reach the desired distribution channel through GTA. GTA as per central tax is an agency providing transport services with the consignment note. A consignment note has the following details: consignor name, consignee name, details of the goods, registration number of the goods carriage, place of destination, the person paying GST – consignor, consignee or GTA, and place of origin.
Exemption to GTA for specified goods:
Agriculture, organic manure, newspaper, milk, salt, pulses, flour, rice, pulses, relief materials and military equipment gets exemption from the GST as they fall under specified goods.
Why Indian government provide an exemption to GTA?
The reverse and forward charge of the transport service outside India is exempted if the transporters have submitted the LuT. If the transport is outside India, it is exempted in case of post-payment and not exempted if it is prepaid. Place of supply identifies the transaction as export and inter-state movement. If the company is using the CGST ACT, 2017, it has to mention that the GTA pay tax as per the forward charge.
Latest amendments for GTA:
• RCM with 5 per cent and FCM with 5 per cent should be selected at the beginning of the year for payment options. If a company pays tax for six months in a different percentage and after that in a different percentage, the lack of the exemptions and amendments are applied as per the payment.
• The exemption of 1500 for the single carriage and 750 for a single consignee is omitted. So, the concerned parties need to pay the tax irrespective of the amount.
• The confusion in the collection of tax with GTA services is resolved by the point that the recipient of the service pays the tax. The provider of service is not liable to pay the tax.
• As per the latest amendment, the GTA need to make a declaration using Annexure V. The submission is with GST jurisdiction on or before 15th March of 2022.
GST is the system that brings uniformity. Small businesses find it easy to submit the GST tax online. It has reduced the burden to low bracket taxpayers. The issues with the GST system are as follows: Input tax credit mismatch issue, the rise of operational cost due to online submission, high rate of interest for late payment, revised returns to correct the mistakes that are not in use and problem with annual return filling as it does not include the voluntary payment. Knowledge and application of knowledge with experience are essential to understanding the amendments with GST for professionals and business owners.