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The government has extended the deadline to May 31 for goods transport agencies to exercise the option of paying GST on forward charge basis for the current financial year.
Under GST, goods transport agencies have the option to collect and pay GST on forward charge basis. If they do not opt to do so, the liability to pay tax is shifted to the recipient of service under reverse charge mechanism.
For opting to pay Goods and Services Tax (GST) under forward charge at the rate of 12% (with input tax credit) and 5% (without ITC benefit) in a financial year, the Goods Transport Agency (GTA ) have to fill up a Form (Annexure V) by 15th March of the previous financial year.
In an amendment to the GST Act, the finance ministry had said in May, “the option for the financial year 2023-2024 (by GTA) shall be exercised on or before May 31”.
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Any entity providing the service of transportation of goods by road and issuing a consignment note for the purpose is defined as a GTA under GST, which came into effect from July 1, 2017.
The amendment further states that a GTA who starts a new business during any financial year or crosses the threshold for registration shall have the option of paying GST on the services supplied by him during that financial year. exercise before 45 days by making a declaration in Annex V. One month from the date of applying for GST registration or the date of obtaining registration, whichever is later.
AMRG & Associates Senior Partner Rajat Mohan said GTAs have the option of paying tax on forward charge or reverse charge and both the mechanisms have their own advantages and disadvantages.
“Forward charge allows a taxpayer to utilize the tax credit and pay tax only on the differential value added. Reverse charge will eliminate the need for maintaining detailed records for payment of taxes and release working capital blocked in taxes.” will also free you,” said Mr. Mohan.