Important Update for All Employees! The New Labour Codes 2025 and All Four Revised Labour Laws Are Now in Effect

On 21 November 2025, the Ministry of Labour & Employment announced the long-awaited implementation of all four Labour Codes — a transformative consolidation of 29 Central labour laws into four simplified, modern, and comprehensive Codes:

  1. Code on Wages, 2019
  2. Industrial Relations Code, 2020
  3. Code on Social Security, 2020
  4. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

This landmark move modernises India’s labour framework, improves worker protection, simplifies compliance for industries, and aligns India with global labour standards — a major reform supporting Aatmanirbhar Bharat.

 

Why Labour Reforms Were Needed

Most existing labour laws were drafted between 1930 and 1950, when the nature of work, employer–employee relationships, and industry structures were vastly different. Over the years, global economies have consolidated and upgraded their labour laws, but India continued to function under fragmented, outdated, and complex regulations.

Challenges under the old regime included:

  • Multiple registrations and returns
  • Unequal wage protection
  • Limited coverage of PF, ESIC, and social security
  • Restrictions on women’s employment
  • High compliance burden on MSMEs
  • Lack of protection for gig, platform, and fixed-term workers

The new Labour Codes bring a uniform, transparent, and technology-driven labour ecosystem that strengthens both worker welfare and industrial productivity.

Before vs After: Key Transformations Under the Four Labour Codes

The following table summarises the shift from the old system to the new labour regime:

1. Formalisation of Employment

  • Earlier: Appointment letters not mandatory
  • Now: Mandatory written appointment letters for all workers → transparency, job security, formal recognition

2. Social Security Coverage

  • Earlier: Limited coverage; gig/platform workers not recognised
  • Now: PF, ESIC, insurance & other benefits available to all workers, including gig & platform workers

3. Minimum Wages

  • Earlier: Applied only to scheduled industries; many workers excluded
  • Now: Statutory minimum wages for all workers under the Code on Wages

4. Preventive Healthcare

  • Earlier: No mandatory annual check-ups
  • Now: Free annual health check-up for all workers aged 40+

5. Timely Payment of Wages

  • Earlier: No uniform requirement
  • Now: Mandatory timelines for wage payment → enhanced financial stability

6. Women in Workforce

  • Earlier: Restrictions on night shifts and certain occupations
  • Now: Women permitted in all jobs and night shifts with consent & safety measures → equal opportunities

7. ESIC Coverage

  • Earlier: Limited to notified areas & certain industries
  • Now:Pan-India coverage, including:
    • Voluntary for establishments < 10 employees
    • Mandatory for even 1 worker in hazardous units

8. Compliance Burden

  • Earlier: Many licences, separate registrations, multiple returns
  • Now: Single registration, single licence, single return → low compliance burden

Sector-wise Benefits Under the Labour Codes

1. Fixed-Term Employees (FTE)

  • FTEs get all benefits equal to permanent workers
  • Gratuity eligibility after 1 year (instead of 5 years)
  • Equal wages & better protection
  • Encourages direct hiring, reduces contract labour exploitation

2. Gig & Platform Workers

For the first time, the Codes legally define:

  • Gig workers
  • Platform workers
  • Aggregators

Key provisions:

  • Aggregators to contribute 1–2% of annual turnover (capped at 5% of worker payouts)
  • Aadhaar-linked Universal Account Number ensures portability of benefits across states

On 21 November 2025, the Ministry of Labour & Employment officially confirmed that the long-discussed labour law overhaul is now a reality. India has put into force all four new Labour Codes, replacing 29 separate Central labour laws with a unified, updated, and simplified framework. These four Codes are:

  • Wages Code, 2019

  • Industrial Relations Code, 2020

  • Social Security Code, 2020

  • Occupational Safety, Health & Working Conditions Code, 2020

This marks one of the biggest reforms in India’s labour system, aimed at strengthening worker rights, reducing compliance burden for employers, and bringing India’s labour ecosystem in line with international standards—supporting the government’s broader push towards Aatmanirbhar Bharat.

(Click here for the official press release.)

Why Did India Need These New Labour Codes?

For decades, India relied on labour laws written in the early to mid-20th century. These laws were created for an era with different industries, limited technology, and a smaller workforce. As the economy grew, these outdated laws became complex, overlapping, and difficult to comply with.

The old system had several issues:

  • Multiple registrations and numerous return filings

  • Minimum wage inconsistencies across sectors

  • Many workers excluded from PF, ESIC, and social security

  • Restrictions on women’s working hours and roles

  • High compliance costs for small and medium businesses

  • No legal coverage for gig workers, platform workers, or fixed-term employees

By replacing 29 laws with 4 broad codes, the government has created a centralised, transparent, and digitally integrated labour system that benefits both workers and employers.

Before vs After: Key Reforms Under the Labour Codes

1. Job Formalisation

  • Earlier: Appointment letters often not issued

  • Now: Appointment letters are compulsory for all workers → better protection & clarity

2. Wider Social Security Access

  • Earlier: Only workers in certain industries were covered

  • Now: PF, ESIC, maternity and other social security benefits extend to all worker categories, including gig and platform workers

3. Universal Minimum Wage

  • Earlier: Minimum wages applied only to specific scheduled sectors

  • Now: Every worker is entitled to statutory minimum wages

4. Health Benefits

  • Earlier: No rule for regular medical check-ups

  • Now: Annual health check-up is mandatory for workers aged 40+

5. Standard Wage Payment Timelines

  • Earlier: No uniform rule

  • Now: Strict deadlines ensure timely payment of wages

6. More Opportunities for Women

  • Earlier: Women faced restrictions in certain jobs and in night work

  • Now: Women can work across all sectors, including night shifts, with consent and safety measures

7. ESIC for All Regions

  • Earlier: ESIC limited to notified areas

  • Now: ESIC available across the country, including:

    • Voluntary coverage for units with <10 workers

    • Mandatory for hazardous establishments even with 1 worker

8. Simpler Compliance Structure

  • Earlier: Many licences, registrations and separate returns

  • Now: Single registration, single licence, single return → easier compliance for businesses

Who Benefits the Most?

1. Fixed-Term Employees (FTEs)

  • Same benefits as permanent staff

  • Eligible for gratuity after 1 year

  • Equal wages and protections

  • Promotes direct hiring instead of contract labour

2. Gig Workers & Platform Workers

For the first time, these categories are legally recognised.

Key features:

  • Aggregator platforms must contribute 1–2% of turnover to social security (capped at 5% of payouts)

  • Workers get Aadhaar-linked Universal Account Numbers ensuring portability of benefits

3. Contract Workers

  • Contract labour will now receive the same social security and health-related benefits as permanent employees.

  • Annual medical check-ups are compulsory.

  • Fixed-Term Employees (FTEs) become eligible for gratuity after completing just one year.

  • The primary employer is accountable for ensuring contractor workers’ welfare.

4. Women Workers

  • Equal pay for equal work is mandated across sectors.

  • Women can work in night shifts, hazardous environments, mining, and heavy machinery—subject to their consent and adequate safety protocols.

  • The definition of “family” now includes parents-in-law.

  • Every workplace grievance committee must include women representatives.

5. Young Workers

  • Minimum wages are guaranteed for youth entering the workforce.

  • Written appointment letters are compulsory.

  • Wages must be paid even when the worker is on leave.

  • A national floor wage ensures a decent standard of living.

6. MSME Workforce

  • All MSME workers fall under the Social Security Code.

  • Minimum wage protection is universal.

  • Employers must provide drinking water, rest spaces, canteens, and basic safety measures.

  • Working hours, overtime rules, and paid leave are standardised.

  • Timely payment of wages is mandatory.

7. Beedi & Cigar Workers

  • Minimum wages apply to all workers in the sector.

  • Working hours capped at 8–12 hours per day and 48 hours weekly.

  • Overtime must be paid at double the regular wage rate.

  • Workers become eligible for bonus after 30 days of employment.

8. Plantation Workers

  • Fully covered under the OSHWC and Social Security Codes.

  • Applicable to plantations with over 10 workers or 5 hectares+.

  • Mandatory safety training, PPE, and safe working conditions.

  • ESIC benefits extend to workers and their families.

  • Education facilities for workers’ children are required.

9. Audio-Visual & Media Personnel

  • Covers journalists, voice artists, stunt performers, and more.

  • Appointment letters are obligatory.

  • Wages must be paid promptly.

  • Overtime compensation at double wages.

  • Full social security coverage is ensured.

10. Mine Workers

  • Travel-related accidents are treated as employment-related (subject to conditions).

  • National occupational safety standards apply.

  • Annual free medical check-ups for all mine workers.

  • Work hours capped at 8–12 hours/day, 48 hours/week.

11. Workers in Hazardous Industries

  • Free annual medical examinations are compulsory.

  • Uniform national safety guidelines must be followed.

  • Women can be employed even in hazardous roles with safeguards.

  • Safety committees must be set up at every hazardous site.

12. Textile Sector Employees

  • Migrant and permanent workers receive equal wages and welfare benefits.

  • Claims for outstanding dues can be filed up to 3 years.

  • Overtime payments are mandatory at double the wage rate.

13. IT & ITeS Employees

  • Salaries must be credited no later than the 7th of every month.

  • Women are permitted night shifts with adequate protection.

  • Grievances on wages and harassment must be resolved swiftly.

  • Appointment letters and equal pay for equal work are compulsory.

14. Dock Workers

  • Appointment letters required for every worker.

  • PF, pension, and insurance benefits apply to contract and temporary workers as well.

  • Employers must fund annual medical check-ups.

  • Hygiene, welfare, and first-aid facilities are mandatory.

15. Export Industry Workers

  • Fixed-term workers entitled to gratuity, PF, and other social security benefits.

  • Eligible for annual leave after 180 days of service.

  • Timely wage payment is compulsory; overtime paid at double the rate.

  • Women can work night shifts with their consent and safety measures.

Additional Major Reforms Under the Labour Codes

  • Introduction of a National Floor Wage across India.

  • Gender-neutral provisions, including protections for transgender workers.

  • Inspector-cum-Facilitator model promoting support before penalties.

  • Faster dispute settlement through upgraded Industrial Tribunals.

  • One licence and one registration for working condition compliance.

  • National OSH Board for safety standard-setting.

  • Mandatory safety committees for establishments with 500+ workers.

  • Higher factory thresholds to ease compliance for smaller units.

Transitional arrangements ensure that earlier laws will continue until notifications under the new Codes are fully operational.

Impact on India’s Social Security Framework

India’s social security coverage increased from 19% (2015) to 64% (2025). The new Codes further strengthen this by ensuring:

  • Universal and portable social security benefits

  • Protection for gig workers, platform workers, migrant labour, women, and young workers

  • Reduced compliance burden on employers

  • Improved job creation and workforce skilling

Conclusion

The implementation of the four Labour Codes is the most significant labour policy transformation in India’s history. It modernises labour governance, enhances worker rights, simplifies compliance for industries, and prepares the workforce for the demands of a fast-evolving economy. This progressive shift strengthens a worker-centric, youth-focused, gender-equal, and employment-driven ecosystem—accelerating India’s path toward a stronger, future-ready, and self-reliant nation.

GSTN set to suspend GSTIN over this compliance violation

GSTN, on 20 November 2025, issued a new advisory emphasizing that taxpayers must furnish their bank account details in accordance with Rule 10A of the CGST Rules, 2017. This obligation covers all registered persons, excluding TCS/TDS applicants and individuals who were granted GST registration through suo-moto action by the department.

What Does Rule 10A of the CGST Rules Mean?

Rule 10A requires that every GST-registered taxpayer—except a few specified categories—must provide their bank account details within 30 days of obtaining GST registration or before filing their first outward supply return (GSTR-1 or IFF), whichever occurs earlier.

Latest Update Issued on 20 November 2025

GSTN has announced that strict enforcement of Rule 10A will soon be activated on the GST portal.

Important points from the advisory:

✔ Mandatory Submission Timeline

Bank account details must be furnished:

  • Within 30 days of receiving GST registration,
    OR

  • Before filing GSTR-1 or IFF,

whichever condition is met first.

✔ Who Needs to Follow This Requirement?

All GST-registered persons except the following:

  • TDS deductors (under Section 51)

  • TCS collectors (under Section 52)

  • Taxpayers who received GSTIN through suo-moto registration (Section 62)

✔ What Happens If You Don’t Update Your Bank Details?

Failure to comply may result in suspension of the GST registration on the portal.

Possible consequences include:

  • Inability to file GST returns

  • Blocking of e-way bill generation

  • Restriction on making outward supplies

  • Risk of cancellation proceedings

Taxpayers are strongly encouraged to update their bank details promptly to prevent any operational or compliance-related disruptions.

Why Has GSTN Issued This Advisory at This Stage?

GSTN has released this clarification due to a growing number of instances where:

  • GST registrations are obtained without any real business operations

  • GSTINs are created without linking a valid bank account

  • Fake invoices are generated even before verification is completed

  • Refunds are claimed without proper banking trails or genuine transactions

By tightening compliance under Rule 10A, GSTN aims to:

✔ Detect fake invoicing networks at an early stage
✔ Prevent fraudulent or non-genuine registrations
✔ Reduce refund frauds and misuse of input tax credit (ITC)
✔ Strengthen taxpayer verification and system reliability

This measure aligns with the Government’s ongoing efforts to enhance the transparency and credibility of the GST framework.

Penalties and Consequences for Not Complying with Rule 10A

If a taxpayer does not update their bank account details within the prescribed timeline, the following actions may occur:

1️⃣ GST Registration May Be Suspended

Your GSTIN will shift to a “Suspended” status, immediately affecting business operations.

2️⃣ GSTR-1 Filing Will Be Blocked

You won’t be able to report outward supplies, which affects your customers and hampers regular business activity.

3️⃣ E-Way Bill Services Will Be Disabled

Movement of goods gets restricted because the portal blocks e-way bill generation.

4️⃣ Department May Issue Notices

The GST department may initiate cancellation proceedings under Rule 21.

5️⃣ Customers’ ITC May Get Affected

If your registration is suspended, the ITC of your buyers may be blocked, leading to disputes and compliance issues.

How to Update Bank Account Details on the GST Portal (Step-by-Step)

Bank details must be updated through a Non-Core Amendment on the GST Portal.

Step 1: Log In

Visit gst.gov.in and sign in using your credentials.

Step 2: Open the Registration Section

Go to:
Services → Registration → Amendment of Registration (Non-Core Fields)

Step 3: Choose the ‘Bank Accounts’ Tab

Enter the following information:

  • Account holder’s name

  • Account number

  • IFSC code

  • Bank name

  • Supporting proof (cancelled cheque/passbook/bank statement)

Step 4: Upload Proof

Make sure the uploaded document clearly shows:

  • Account number

  • Name of the account holder

  • IFSC code

  • Bank name

Step 5: Verify & Submit

Submit the amendment using DSC or EVC.
An ARN will be generated after submission.
If the details match PAN records and GST data, approval is usually automatic.

Which Documents Are Accepted as Valid Proof?

The GST Portal permits the following documents as proof of bank account details:

  • A cancelled cheque

  • The first page of the bank statement

  • The first page of the passbook

The document must clearly display the account holder’s name, account number, IFSC code, and bank name.

Common FAQs for Taxpayers and Professionals

1️⃣ Can a savings account be used?

Yes. Proprietors may use a savings account, although opening a current account is preferable for business transactions.

2️⃣ Is a joint bank account allowed?

No. The bank account must be solely in the name of the person or entity holding the GST registration.

3️⃣ What if the bank account has not been opened yet?

Open the account and update the information at the earliest. Delays may result in registration suspension.

4️⃣ Can a taxpayer begin business without updating bank details?

No. GSTR-1 filing is blocked until bank account details are added.

5️⃣ What if incorrect bank details were submitted?

You must revise the information through a Non-Core Amendment. Incorrect details can also trigger suspension.

The GSTN advisory issued on 20 November 2025 clearly indicates that providing bank account information under Rule 10A is no longer optional—it is a mandatory compliance requirement directly tied to maintaining an active GST registration.

Taxpayers and practitioners should ensure the details are updated promptly to avoid disruptions.

Revised ITR forms will be released by January 2026.

The Income Tax Department has announced that the new Income Tax Return (ITR) forms and rules will be notified by January 2026 for Financial Year 2025–26 (Assessment Year 2026–27).

CBDT Chairman Ravi Aggarwal has confirmed that these new forms will be simpler, more user-friendly, and easier to file, ensuring that taxpayers and the tax ecosystem get sufficient time to adjust to the updated system.

This advance announcement is a major compliance reform aimed at reducing last-minute rush, errors, and extensions during the filing season.

Why Are the New ITR Forms Being Released Early? (Key Reason)

The Income Tax Department has chosen to issue the upcoming ITR forms much earlier than before for a very specific reason.

Previously, the forms were released late, which led to several recurring problems:

  • Taxpayers didn’t get enough time to understand the updated forms

  • Tax professionals faced excessive workload and frequent delays

  • Software providers struggled to update their systems on time

  • AIS/TIS mismatches surfaced too late in the filing cycle

  • Filing deadlines had to be extended multiple times

  • Late notifications also slowed down return processing and refund issuance

To prevent these year-after-year disruptions, the Government now aims to achieve:

✔ Timely release of forms
✔ Early readiness of the software ecosystem
✔ A smoother filing season
✔ Reduced pressure on taxpayers and professionals
✔ No requirement for deadline extensions

This is the core reason why the new ITR forms are being scheduled for early notification—by January 2026.

What Will Be New in the Upcoming ITR Forms? (Likely Features)

While the final versions of the new ITR forms are still awaited, government updates and recent policy changes indicate that several enhancements are on the way.

1. Simpler and More Compact Formats

  • Considerably reduced manual data entry

  • Fewer supporting documents or annexures

  • Better-organized and clearly defined schedules

  • Instructions written in easy, plain language

2. Enhanced Prefilled Information

The new system is expected to pull data automatically from multiple sources, including:

  • AIS

  • TIS

  • Form 26AS

  • GST data for businesses

  • Capital gains statements from brokers

This expanded prefilled data will minimize mistakes and speed up return filing.

3. Smart, Category-Based ITR Structure

The government may introduce separate streamlined forms designed specifically for:

  • Salaried individuals

  • Small businesses

  • Professionals

  • Senior citizens

  • Taxpayers with capital gains

  • Companies, LLPs, trusts, and other complex entities

4. Better Technology and Automated Error Checks

  • Instant alerts for mismatches

  • Automatic validation before filing

  • Elimination of duplicate entries

  • More seamless coordination with e-verification and refund systems

The decision to notify the new ITR forms by January 2026 represents a major reform in India’s tax administration. The objective is straightforward:
simple forms + early release + a smoother filing season.

With this early announcement, taxpayers, accountants, and software providers get ample time to prepare before the new forms become mandatory from 1 April 2026. This is expected to reduce errors, minimize mismatches, and create a much better filing experience overall.

Why TDS Is Charged on Cash Withdrawals by Banks – Key Rules Explained

The purpose of introducing Section 194N is to curb heavy cash usage and support the shift toward a digital and transparent economy. According to this section, TDS is deducted on cash withdrawals from banks, co-operative banks, or post offices once the total amount goes beyond the set yearly limit. It covers a wide range of taxpayers—individuals, HUFs, businesses, companies, and trusts—so knowing how it works is crucial for compliance.

Where Section 194N Applies
Section 194N is triggered when cash is taken out from a scheduled bank, a co-operative bank, or a post office. TDS is deducted once the total cash withdrawn during the financial year exceeds the allowed limit.

Cash can be withdrawn through:

  • Self cheques

  • Bearer cheques

  • ATM withdrawals

  • Cash taken directly from the bank counter

Online transfers and digital payments are excluded from TDS.

TDS Rates and Limits
The applicable TDS rate depends on whether the taxpayer has filed income tax returns for the past three assessment years.

A. When the individual has filed Income Tax Returns for any of the previous three years

  • No TDS is applied until total cash withdrawals reach ₹1 crore in a financial year.

  • Once this limit is crossed, TDS is charged at 2% on the amount exceeding ₹1 crore.

Example:
If the total cash withdrawn is ₹1.30 crore, TDS @ 2% will apply on ₹30 lakh.

B. When the individual has not filed ITRs for all of the last three years

  • A 2% TDS rate applies on withdrawals above ₹20 lakh up to ₹1 crore.

  • A 5% TDS rate applies on any withdrawal amount beyond ₹1 crore.

Example:
Total withdrawal = ₹1.50 crore

  • 2% on ₹80 lakh (from ₹20 lakh up to ₹1 crore)

  • 5% on ₹50 lakh (amount beyond ₹1 crore)

Entities Exempt From Section 194N

TDS is not deducted on cash withdrawals made by:

  • Central and State Government bodies

  • Banks, co-operative banks, and post offices

  • Business correspondents operating for banks

  • White label ATM operators

  • Any person or class of persons specifically notified by the government

  • Certain commission agents/traders who withdraw cash on behalf of farmers

These exemptions are designed to keep essential services and banking operations running smoothly.

How Section 194N Works in Practice

How banks calculate TDS

  • Banks total all cash withdrawals across every account held by the user.

  • TDS is triggered immediately once the withdrawal crosses the applicable threshold.

  • PAN data is used to determine whether the person is an ITR filer or a non-filer.

  • Banks may request confirmation of ITR filing status to apply the correct rates.

  • The deducted TDS is reflected in Form 26AS or AIS and can be claimed in the income tax return.

Key Examples

Example 1: ITR Filer

Mr. A (who has filed ITRs) makes the following withdrawals:

  • ₹40 lakh

  • ₹35 lakh

  • ₹30 lakh
    Total = ₹1.05 crore
    TDS = 2% on ₹5 lakh = ₹10,000

Example 2: ITR Non-Filer

Ms. B (no ITR filed for 3 years) withdraws ₹55 lakh.
TDS = 2% on (₹55 lakh – ₹20 lakh) = ₹7,00,000

If she withdraws ₹1.40 crore:

  • 2% on ₹80 lakh

  • 5% on ₹40 lakh

Important Compliance Tips for Professionals

  • Make sure clients have filed their ITRs to avoid higher TDS rates.

  • Advise cash-heavy businesses to plan their yearly cash withdrawals carefully.

  • Track withdrawals from every account held in the same bank.

  • Review Section 194N entries in Form 26AS/AIS regularly.

  • Maintain proper records for audit purposes, especially for large cash withdrawals.

  • Remind clients that TDS is not an additional tax—it can be adjusted or refunded in the ITR.

Frequent Errors to Watch Out For

  • Thinking each account has a separate ₹1 crore limit—limits apply per bank, not per account.

  • Assuming TDS is charged only at the end of the year—it applies as soon as the limit is crossed.

  • Misunderstanding the difference between filer and non-filer status.

  • Failing to monitor withdrawals from all branches of the same bank.

  • Believing TDS is a permanent loss—it is actually claimable

 

 

Taxation of GTA Services under GST and Application of RCM

Definition of a GTA

A Goods Transport Agency is defined as a person providing road transport services for goods and issuing a consignment note.
If a transporter does not issue a consignment note, they are not considered a GTA, and their services are not liable to GST.
Thus, independent truck or tempo owners who do not provide consignment notes are typically not classified as GTA.

GST Taxability Framework for GTA Services (Revised up to 22.09.2025)

Tax Structure

Category GST Rate ITC Availability Person Liable to Pay Tax
RCM (Reverse Charge Mechanism) 5% ITC available to the recipient Recipient of service
FCM (Forward Charge Mechanism) 18%* Full ITC allowed GTA
FCM – Optional Concessional Rate 5% No ITC for the GTA GTA

*Prior to 22.09.2025, the applicable rate was 12% with ITC.

Key Points

A GTA must choose the Forward Charge option (18%) every year by submitting Annexure V on the GST portal.
If the GTA wishes to discontinue the option, Annexure VI must be filed; otherwise, the GTA will continue under the default RCM structure (5%).
Once selected, the option remains valid for the entire financial year.

GTA must also include a declaration on invoices when opting for Forward Charge.

Mandatory Invoice Declaration (for Forward Charge)

When a GTA chooses to pay GST under Forward Charge, they must include the declaration as specified in Annexure III of Notification 13/2017, inserted through Notification 5/2022–Central Tax (Rate) dated 13-07-2022 (effective from 18-07-2022).

Declaration:
“I/We have obtained registration under the CGST Act, 2017 and have opted to pay GST on GTA services for transportation of goods under Forward Charge from the Financial Year ______. We have not switched back to the Reverse Charge Mechanism.”

Liability to Pay GST under RCM

GST under the Reverse Charge Mechanism (RCM) becomes payable when the freight charges are borne by any of the following types of recipients:

  • A factory

  • A society

  • A cooperative society

  • A body corporate

  • A GST-registered person

  • A partnership firm or an Association of Persons (AOP)

  • A casual taxable person

If the freight is paid by an unregistered customer, the GTA will need to charge 18% GST under Forward Charge (only if the GTA has opted for FCM).
If the GTA has not opted for Forward Charge, the service continues to be exempt for unregistered recipients as per GTA provisions.

Situations Where RCM Does Not Apply

The Reverse Charge Mechanism (RCM) is not applicable to GTA services when goods are transported by road in a goods carriage to the following entities:

(a) Any department or establishment of the Central Government, State Government, or Union Territory;
(b) Any local authority;
(c) Any governmental agency,

provided that such entities are registered under the CGST Act solely for the purpose of TDS compliance under Section 51, and not for carrying out taxable supplies of goods or services.

Important Note

These services are exempt from GST under Entry 21B of Notification 12/2017, meaning no GST liability arises in such cases.

GTA Service Exemptions

The following categories of transportation services provided by a Goods Transport Agency remain exempt from GST:

  • Transport of agricultural produce

  • Milk, food grains, and salt

  • Organic manure

  • Newspapers

  • Relief or disaster-related materials

  • Defence-related goods transported for the Government

  • GTA services provided to an unregistered individual, including an unregistered casual taxable person

Place of Supply Rules for GTA Services

  • If the recipient is registered: The place of supply is the location of the recipient.

  • If the recipient is unregistered: The place of supply is the location where the goods are handed over to the GTA for transportation.