Baburam, the owner of a goods transportation agency, hurried inside the office of Kushal, a CA by profession, whov looked after Baburam’s files.
“Baburam ji!” Kushal greeted, “Long time. How are you doing?”
“I ain’t doing any fine,” Baburam retorted as he sat down, “For truck owners and transporters like us, GST has hit us like a speeding truck!”
“Well, GST has indeed hit the country,” Kushal smiled, “But of all the people, I thought you’d be happy with the “truck” known as GST!”
“Why would we be happy? The companies are asking for our GST registration! There’s a lot of confusion. Some say, we don’t need to apply, others are jabbering about Ridiculous Charge Mechanism!”
“Ha, ha, ha!” Kushal laughed, “It’s not Ridiculous but Reverse Charge Mechanism!”
“Whatever,” Baburam said, “everything looks ridiculous nowadays!”
“Well, speaking of your business, Baburam ji, you have a Goods Transportation Agency,” Kushal explained, “And in your case, you are generally exempted under the umbrella of GST.”
“How come?” Baburam was eager to know.
“Normally a service provider is required to pay taxes, but in case GTA provides the services to the following persons, recipient of services is required to pay GST under reverse charge:-
“That sounds good,” Baburam said, “You mean to say that if I am transporting cement bags of a cement company from one place to another and I am charging Rs 25000.00 freight from them, then I don’t have to do anything about GST?”
“Exactly, “Kushal said, “In such a case the company will pay you Rs 25000.00 and the company will also pay the GST @ 5 % on Rs 25000.00. The company will be able to take the credit of such tax paid.”
“Hmmm…okay. But even if we are exempt, do we have to apply for GST registration?” Baburam asked.
“No.” Kushal said, “As per a recent notification by the Government, GTA are not required to obtain registration under GST. Furthermore, following services provided by a goods transport agency, by way of transport in a goods carriage are exempted:
“That’s very good.” Baburam nodded.
“But there are some rare cases which require GTA to take GST registration.” Kushal said.
“If the GTA provides service other than exempted services or services liable to reverse charge, in such a case, the GTA needs to take registration."
“Yeah, we generally provide our service to big corporations and firms and so no GST for us.” Baburam observed and said, “Furthermore, on rare occasions, we provide GTA service to unregistered small parties. But per consignment value is always less than Rs 1500. And so we don’t need to have GST registration such case either.
“Right you are!” Kushal said and continued "GTA has the option of either paying tax under forward charge @ 12% (CGST +SGST) or letting the recipient pay the tax @ 5% (CGST + SGST). However, no ITC will be available to the GTA if the recipient is bearing the burden of GST under reverse charge."
“Thank you so much for all the clarifications!” Babruram said as he stood up.
“You are always welcome!”