The present GST Council Meeting observed that the supply of goods and services by Indian Railways taxable under Forward Charge Mechanism.
The Council noted that the supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC. This will reduce the cost for Indian Railways.
As per GST provisions, for the services rendered by Railways to Unregistered Persons, invoice is to be issued under forward charge mechanism by Railways for taxable value plus GST and remit the GST collected to the Government. In respect of all taxable services supplied by Government Entity, supplier of such services is liable to collect and pay GST on Forward Charge basis.
The forward charge mechanism (FCM) is a system where suppliers of goods or services are responsible for collecting tax from the recipient and remitting it to the government. This mechanism relieves recipients from the direct tax payment burden, making it easier to comply with GST regulations.
In the 50th GST Council meeting held on 11th July 2023, the Council provided a relaxation for Goods Transport Agencies (GTAs) wishing to pay GST on a forward charge basis. GTAs will not be required to file a declaration for paying GST under forward charge every year. The option, once exercised for a particular financial year, will be deemed to have been exercised for future financial years unless a declaration is filed to revert that decision.
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