GST portal update: GTAs can opt to pay GST on a forward charge basis by 15th March 2023

On 25th February 2023, the GST Network (GSTN) released an advisory announcing a new GST portal facility for all the Goods Transport Agencies (GTA) to opt for GST payment on a forward charge. 

The update comes in response to the CGST rate notification number 3/2022

released last year on 13th July 2022. The CBIC notified that the GTAs could pay GST on a forward charge basis, either at 5% (without tax credit) or 12% (with tax credit), along with the reverse charge option.

The move streamlined the taxability under GST for businesses into goods transport agency services. However, the notification also laid down Annexure V for such interested taxpayers to submit a declaration before the financial year starts for opting into GST payment on a forward charge.

The facility for submitting declarations is now open on the GST portal. The deadline to take action is 15th March 2023 for the FY 2023-24. Applicable taxpayers can visit the website www.gst.gov.in. Afterwards, they must log in to the portal, navigate to ‘Services’, and click the ‘Opting Forward Charge Payment by GTA (Annexure V)’ button under the ‘User Services’ tab. 

The taxpayers who provide GTA services must take action in Form Annexure V on the GST portal every year before a new financial year begins. They can file this form only if they are interested in paying GST on a forward charge basis throughout the financial year. Else, they’ll remain taxed on a reverse charge basis. 

Another important note is that the choice cannot be withdrawn between the financial year and must be submitted by 15th March of the financial year preceding the relevant financial year. Hence, the window to submit Annexure V for GTAs has gone live on the GST portal and will be available until 15th March 2023 for the financial year 2023-24.

Along with the annual declaration, such GTA taxpayers opting to pay GST on a forward charge must declare as per Annexure III along with the tax invoice that they are registered under GST and have opted for GST payment under a forward charge mechanism every time they raise bills. It lets the recipients know that their GTA supplier is collecting tax from them on the invoice and need not pay GST on a reverse charge basis.

Impact of options decoded

The GTAs must choose to charge 5% GST without ITC claims and 12% GST with ITC claims on their purchases. It would be beneficial for GTAs to switch to forward charge where they want to stay compliant and positively impact their sales volume and prices. They can choose a 5% GST charge where they have a less compliant or non-compliant vendor base or mostly deal with suppliers in unregulated sectors. On the other hand, they can go for a 12% GST charge where they have a compliant vendor base or deal with regulated sectors.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in