Do we pay GST under reverse charge on freight, advocate fees and director fees?

Your accounts team has just booked three bills. A transporter's freight bill with no GST on it. A lawyer's fee note for a court matter. A monthly payment to an independent director. Each one looks like "no GST charged, so nothing to pay". For all three, that can be wrong. In certain cases the law makes you, the buyer, pay the GST to the government.

This article covers those three entries and the traps in each. It does not cover the unregistered-supplier rule, the GSTR-3B reporting table, or services bought from abroad. Those have their own articles.

The rule behind all three

Normally the seller collects GST and pays it in. Section 9(3) of the CGST Act, 2017 lets the Government notify categories of supply on which the tax "shall be paid on reverse charge basis by the recipient". Once it is notified, "all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax". So you pay the tax, you report it, and you follow every compliance rule a seller would.

The list of services is in Notification 13/2017-Central Tax (Rate), dated 28 June 2017, effective from 1 July 2017. It has been amended since. The three entries below are serial numbers 1 (goods transport agency), 2 (advocates) and 6 (directors).

One caution. The copy of this notification we could open is the 28 June 2017 text. It has been amended since, for example by Notification 05/2022-Central Tax (Rate) dated 13 July 2022 for freight. Where a later amendment is not on the page, this article says so rather than guessing.

1. Freight by road: goods transport agency (GTA)

What the law says. Serial number 1 covers "supply of services by a goods transport agency (GTA) in respect of transportation of goods by road" to specified recipients. The recipients listed are:

a factory registered under or governed by the Factories Act, 1948;
a society registered under the Societies Registration Act, 1860 or any other law;
a co-operative society established under any law;
a person registered under the CGST, IGST, State GST or Union Territory GST Act;
a body corporate established by or under any law;
a partnership firm, registered or not, including an association of persons; and
a casual taxable person,

in each case located in the taxable territory.

In plain words, if your company is registered under GST and hires a transporter who is a GTA, the reverse charge is likely to apply to you, subject to the exceptions below. Serial number 1 also carries provisos. The 2017 text we could open does not show the first proviso, which a later amendment refers to, so read the current entry on the CBIC site before you rely on this summary.

Who is a GTA. The rate notification (Notification 11/2017-Central Tax (Rate), as amended by Notification 03/2022-Central Tax (Rate) of 13 July 2022) defines it: "any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called." A consignment note is the document the transporter issues when taking the goods. A person who only lends you a truck, without issuing a consignment note, is not a GTA on this definition.

Who counts as the recipient. Explanation (a) to the notification says the person "who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory" is treated as the recipient. So the question is who bears the freight, not whose name is on the lorry receipt.

The forward-charge exception. Notification 05/2022-Central Tax (Rate), effective from 18 July 2022, added a second proviso to serial number 1. The reverse charge does not apply where both of these are true:

"the supplier has taken registration under the CGST Act, 2017 and exercised the option to pay tax on the services of GTA in relation to transport of goods supplied by him under forward charge"; and
"the supplier has issued a tax invoice to the recipient charging Central Tax at the applicable rates and has made a declaration as prescribed in Annexure III on such invoice."

Annexure III reads: "I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year ____ under forward charge."

The same notification also omitted the earlier words "who has not paid central tax at the rate of 6%".

What this means for you. Look at the invoice, not only at the supplier's name.

Invoice shows GST charged and the Annexure III declaration: the GTA is on forward charge. You do not pay RCM on it. Whether you can claim credit on it is a separate question under section 16 of the CGST Act, 2017.
Invoice shows no GST, or GST without the declaration: treat it as reverse charge until you have checked.

How the GTA opts in. Under Notification 11/2017-Central Tax (Rate) as amended by Notification 03/2022 of 13 July 2022, the option is made by a declaration in Annexure V "on or before the 15th March of the preceding Financial Year". The Annexure V text adds that the option "shall not be allowed to be changed within a period of one year". For a GTA that starts business or crosses the registration threshold during a year, an ICSI GST newsletter (June 2023) summarises the rule as an option "before the expiry of forty-five days from the date of applying for GST registration or one month from the date of obtaining registration whichever is later".

The window has since been reported as changed. An ICSI newsletter (February 2024), reporting a GST portal advisory of 1 January 2024 on Notification 06/2023-Central Tax (Rate) of 26 July 2023, says a GTA exercises the forward-charge option (Annexure V) or the reverse-charge option (Annexure VI) from 1 January to 31 March of the current financial year, for the next one. We could not open Notification 06/2023 itself, so treat this as a secondary report. Ask the transporter for the declaration it has actually filed, and check the dates on the GST portal.

Rates. The central tax rates for GTA services sit in Notification 11/2017, not in Notification 13/2017, and they have changed. The July 2022 text of Notification 03/2022 showed 2.5% central tax for GTA services, with a condition that credit of input tax on goods and services used in supplying the service is not taken. That is a 2022 position, not a current rate. A later amendment, Notification 15/2025-Central Tax (Rate) of 17 September 2025, effective 22 September 2025, changed entries for multimodal transport credit among other things. Look up the rate and conditions in force in the current CBIC rate notification when you compute the liability.

2. Advocates and law firms

What the law says. Serial number 2 covers "services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory", including where the engagement came through another advocate or a firm. It also covers services "by a firm of advocates, by way of legal services, to a business entity".

The recipient is "any business entity located in the taxable territory". Explanation (c) adds that the business entity which is "litigant, applicant or petitioner, as the case may be" is treated as the recipient of the legal services.

What this means for you.

You are a company, LLP or other business entity and you engage an advocate or a law firm. The fee is liable to GST on reverse charge in your hands.
The wording differs for the two suppliers. For an individual advocate the entry speaks of representational services before a court, tribunal or authority. For a firm of advocates it speaks of legal services. Read the exact words against what the bill is for.
The test for the recipient is the litigant, applicant or petitioner (Explanation (c)), not whoever pays the fee note.
The copy we could open is the 2017 text. We could not open any later amendment to serial 2, so confirm the current entry on the CBIC site.

3. Directors' remuneration

What the law says. Serial number 6 covers "services supplied by a director of a company or a body corporate to the said company or the body corporate". The supplier is the director. The recipient is the company or body corporate located in the taxable territory. "Body corporate" has the meaning in section 2(11) of the Companies Act, 2013 (Explanation (b)).

The salary question. The ICSI GST educational series of 11 June 2020 summarises CBIC Circular 140/10/2020-GST dated 10 June 2020 as clarifying that (we have the summary, not the circular itself):

remuneration paid to independent directors "who are not employees of the company" is taxable in the company's hands on reverse charge;
the part of remuneration declared as salary and subjected to TDS under section 192 of the Income-tax Act, 1961 is not taxable; and
"where the director's remuneration is in the nature of professional fees and not 'salary', GST will be levied on RCM basis".

In practice, the split is usually this.

Fees paid to an independent director who is not an employee: reverse charge.
Remuneration declared as salary with TDS under section 192 of the Income-tax Act, 1961: outside the reverse charge.
Remuneration in the nature of professional fees: reverse charge.

Check how the payment is booked and which TDS treatment applied. The GST view and the TDS view should agree. Serial 6 as we could open it is the 2017 text, so confirm the current entry on the CBIC site.

What to do at month-end

Pull every vendor bill booked under freight, legal and professional fees, and director's fees. Do not rely on the vendor's GST status alone.
For each freight bill, find out whether the supplier is a GTA (consignment note issued) and whether the invoice carries GST with the Annexure III declaration.
For legal bills, confirm the supplier is an advocate or law firm and the recipient is a business entity.
For director payments, separate salary from fees.
Compute tax at the rate and conditions in the current CBIC rate notification.
Pay and report the tax through your GSTR-3B. Where to show it is in our separate article on reverse charge in GSTR-3B; purchases from unregistered sellers are covered in the article on section 9(4).

What not to do

Do not assume that a registered vendor means no reverse charge. Serial 1 applies to GTAs even when they hold a GSTIN, unless the forward-charge conditions are met.
Do not read "GST not charged" on a bill as the end of the matter. Where the entry applies, the liability is yours.
Do not treat all director payments as salary.
Do not use the 2017 text of the notification from an old guide. Entry 1 was amended in 2022.

What to do now

Next step: list the last three months of freight, legal and director payments and tag each as RCM or not (section 9(3), CGST Act, 2017).
Deadline: check the current due date for your GSTR-3B on the GST portal; it is not in the notification.
Consequence: as recipient you are treated as the person liable for the tax, and "all the provisions of this Act" apply to you (section 9(3), CGST Act, 2017).

Have a CA review your facts before you act or file.

FAQs

Does the reverse charge apply if the GTA is not registered? Entry 1 as we could read it names the supplier as a goods transport agency and lists the recipients. It does not turn on the GTA's registration in the text we have. Because the entry has provisos we could not see in full, confirm against the current entry. Unregistered-seller purchases generally are a different rule, covered separately.

Can we take input tax credit on the RCM we pay? The notification does not answer that. It is a section 16 CGST Act, 2017 question; see our article on the credit time limit.

Our advocate is also a registered person. Does that change anything? On the 2017 text, entry 2 turns on the supplier being an advocate, a senior advocate or a firm of advocates and on the recipient being a business entity, with no registration condition. Confirm against the current entry.

Is a sitting fee to an independent director on RCM? The ICSI summary of the circular speaks of "remuneration paid to independent directors" who are not employees. It does not mention sitting fees by name, so ask your CA to read the circular itself for your case.

Can the GTA change from forward charge back to RCM in the middle of the year? The Annexure V text says the option "shall not be allowed to be changed within a period of one year". A later Annexure VI route is reported by ICSI but we could not read the notification, so ask the transporter for its current declaration.

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