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GST on Goods Transport Agency (GTA)

Applicability of GST on transport

Notification No. 12-2017 dated 28 June 2017 exempts the “Service by way of transportation of goods

  • by road except the services of
    • Goods Transport Agency and
    • courier agency.
  • by inland waterways."

Accordingly, GST will apply to the service of transportation of goods by road only if services are provided by GTA or courier agency. It is relevant to note that services provided by GTA include not only transportation services but also other ancillary services such as loading, unloading, packing, transshipment, etc.

What is a Goods Transport Agency (GTA)?

As per Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. This means any individual will be considered as GTA only when he engaged in the services of transportation of goods by road and issues consignment note. If the consignment note is not issued by the transporter, he will not come within the ambit of GTA. Further, the services provided by transporters who do not issue consignment note will be covered under the exemption Notification No.12/2017-Central Tax (Rate).

Reverse charge mechanism

Under reverse charge mechanism (RCM), the recipient of goods or services is liable to pay tax and all provisions of GST law shall applicable to him as he is a person who liable to pay tax. Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 has notified the applicability of reverse charge on GTA as follows: “Supply of Services by a goods transport agency (GTA) who has not paid central tax at the rate of 6% in respect of transportation of goods by road to-

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

 (c) any co-operative society established by or under any law; or

(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or

(e) any-body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person.”

This means, if GTA services are availed by the above categories of persons in the taxable territory and the GTA does not avail the option to pay GST @12% (Central tax 6% + Integrated tax 6%), the recipient will liable to pay GST on reverse charge basis. In all other cases, where the recipient does not fall in the categories mentioned above, the GST liability will be on the GTA agency.

GST rate and input tax credit

When GTA is liable to pay GST, GTA can exercise any of the following two options at the beginning of the year-

Option 1: Pay 5% GST and input tax credit cannot be availed

Or

Option 2: Pay 12% GST and input tax credit can be availed

 

GTA who are having their own vehicles and having huge input credit on capital goods may find option 2 (Pay 12% GST with ITC) beneficial.

Where tax liability on GTA services is discharged by the recipient under reverse charge mechanism, the recipient is entitled to take credit of the amount of tax paid if it is used in the course or furtherance of business at his end.

Exemptions available to Goods Transport Agencies

Services provided by GTA in relation to the following items are exempted from GST –

(a) Agriculture produce;

(b) Goods where transport charges for single carriage do not exceed Rs 500;

(c) Goods where transport charges for all such goods for a single consignee do not exceed Rs 750;

(d) Milk, salt, and food grain including flour, pulses, and rice;

(e) Organic manure;

(f) Newspaper or magazines registered with the Registrar of Newspapers;

(g) Relief Materials for victims of naturals or manmade disasters;

(h) Defense or military equipment

Tax Invoice of GTA

If GTA supplying taxable services in relation to transportation of goods by road in a goods carriage, the GTA shall issue a tax invoice containing-

(a) the gross weight of the consignment

(b) name of the consignor and the consignee

(c) registration number of goods carriage in which the goods are transported

(d) details of goods transported

(e) details of place of origin and destination

(f) GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency, and

(f) other information as prescribed under rule 46 and rule 54(3) of CGST Rules, 2017

Accounts & records to be maintained by GTA

As per section 35(2) of CGST Act 2017, every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee, and other relevant details of the goods in such manner as may be prescribed.

Further, as per rule 56 of the CGST Rules 2017, transporters are required to maintain records of goods transported, delivered, and goods stored in transit along with the GSTIN of the registered consigner and consignee.

Composition scheme

As per section 10(2) of CGST Act, 2017, the GST composition scheme is not available for service providers except restaurants. Accordingly, GTA cannot opt for a composition scheme under GST.


TaxGyata Team

TaxGyata Team

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