GST on Goods Transport Agency (GTA)

Meaning of GTA:-

GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. The GST Act does not provide the definition of GTA. The above definition of GTA is given as per para 2(ze) of notification 12/2017- Central Tax (Rate) dated 28-06-2017.

Importance of Consignment Note:-

As per rule 54(3) of CGST Rules, 2017 read with rule 46 Consignment note means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, GSTIN of person liable for paying GST whether consignor, consignee or the goods transport agency.

Issuance of a consignment note is the essential condition for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GTA. If a consignment note is issued, it indicates that the lien on the goods has been transferred to the transporter and the transporter becomes responsible for the goods till it’s safe delivery to the consignee.

Service Provided by GTA:-

The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-

• Loading/unloading
• Packing/ unpacking
• Trans-shipment
• Temporary warehousing etc.

If these services are included and not provided as independent activities, then they are also covered under GTA.

Liability of GTA to take Registration:-

There was a lot of confusions whether a GTA has to register under GST.

As per Notification No. 5/2017- Central Tax dated 19-06-2017, a person who is engaged in making only supplies of taxable goods/services on which reverse charge applies is exempted from obtaining registration under GST.

Therefore, a GTA does not have to register under GST if he is exclusively transporting goods where the total tax is required to be paid by the recipient under reverse charge basis (even if the turnover exceeds 20 lakhs).

Please note that this is not applicable for interstate transactions since section 24(i) mandates compulsory registration in case of interstate transactions irrespective of threshold limit. Further, registration is required in a state from where supply is made and not where supply is made.

GTA services are mostly covered by RCM but if they are only to specified persons as per Notification no. 13/2017- Central Tax (Rate) dated 28-06-2017. List of specified person is provided in point (a) to (g) of serial no. 1 of Notification no. 13/2017- Central Tax (Rate) dated 28-06-2017.

As per serial no. 18 of Notification no. 12/2017- Central Tax (Rate) dated 28-06-2017 transportation of goods by road except GTA and Courier Agency is exempt. There is no liability of registration for such service providers.

Exemptions Available to GTA:-

• Services provided by a GTA, by way of transport in a goods carriage of:
  • agricultural produce
  • goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees
  • goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty
  • milk, salt and food grain including flour, pulses and rice
  • organic manure
  • newspaper or magazines registered with the Registrar of Newspapers
  • relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
  • defence or military equipments
• Services by way of giving on hire to GTA, a means of transportation of goods. Thus, if the GTA hires a means of transportation of goods, no GST is payable on such transactions.

Reverse Charge Mechanism for GTA Services:- Reverse charge means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of goods or services or both.

As per serial no. 1 of Notification no. 13/2017- Central Tax (Rate) dated 28-06-2017 following are the specified person who are require to deposit GST under RCM at the rate of 5% :-

• any factory registered under or governed by the Factories Act, 1948 (63 of 1948)
• 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
• any co- operative society established by or under any law
• any person registered under the Central Goods and Services Tax Actor the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act
• any body corporate established, by or under any law
• any partnership firm whether registered or not under any law including association of persons
• any casual taxable person

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 shall be treated as the person who receives the service i.e. service recipient.

Rates of GST:-

Forward charge mechanism – GST @ 6% CGST (with ITC)

Reverse charge mechanism – GST @ 2.5% CGST (without ITC and to be paid by service recipient)

Place of Supply for GTA Services:- If services provided to a registered person, place of supply will be location of such person.

If services provided to a person other than a registered person, place of supply will be location at which such goods are handed over for their transportation.

However, where the location of supplier of services or the location of recipient of services is outside India, place of supply of services of transportation of goods by GTA shall be the place of destination of such goods.

As per serial no. 21A of Notification No. 32/2017- Central Tax (Rate) dated 13.10.2017 services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person is exempt.

Crux:-

1. Only transport of goods by GTA or Courier Agency is taxable.

2. In cases where the service of GTA is availed by the specified categories of persons in the taxable territory, the recipients are liable to pay GST @ 5% and not the supplier of services unless the GTA opts for collecting and paying taxes @ 12% (6% CGST + 6% SGST).

3. No registration required if providing services @ 5% without ITC i.e. providing exclusively RCM supplies.

4. Otherwise Registration required if crosses 20L limit (40l is for traders of goods not for services)

5. Exemption only if transporting specific goods or if providing services to an unregistered person.