No reverse charge applicable in case of goods transport agency charging taxes at the rate of 12%

Raju Choudhary

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Staff member
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No reverse charge applicable in case of goods transport agency charging taxes at the rate of 12%

(a) Affected provision - Section 9(3) of the CGST Act, 2017

  1. Notification no. 13/2017-Central Tax (Rate) dated 28th June 2017
  2. Notification no. 10/2017-Integrated Tax (Rate) dated 28th June 2017
  3. Notification no. 13/2017-Union Territory Tax (Rate) dated 28th June 2017
(b) Relevant notifications
  1. Notification no. 22/2017-Central Tax (Rate) dated 22nd August 2017
  2. Notification no. 22/2017-Integrated Tax (Rate) dated 22nd August 2017
  3. Notification no. 22/2017-Union Territory Tax (Rate) dated 22nd August 2017
(c) Effective date of applicability - 22nd August 2017

(d) Effect of the amendment - -When services are supplied by Goods transport Agency to a certain category of persons, tax was liable to be paid under reverse charge mechanism at the consolidated tax rate of 5% by the recipient of those services. The input tax credit was not available to the goods transport agency either.


As per the amendment made through notifications dated 22nd August 2017, an option to pay taxes has now been given to the goods transport agency. Goods transport agency can opt to pay taxes at the rate of 12% after collecting the same from the recipient. Further, it will be allowed to avail input tax credit on the goods and services procured. If the goods transport agency opts for this rate of 12%, then no reverse charge will be applicable in the hands of the recipient for the said supply.
 
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