Highlights of Article
-All Transport services by road are exempt from GST except services from GTA and Courier agency
-Anyone who provides consignment note for goods delivery will be treated as GTA
-Mere Bill is not a consignment note
-5% GST rate is applicable for transportation service by GTA on RCM basis means GST is payable by recipient. (NO ITC to transporter)
-12% GST rate on forward charge basis (ITC is available to transporter)
-Services provided by GTA to unregistered person is exempt except if he adopts to pay GST on forward charge basis
-Services provided by GTA for agriculture product is exempt
-If consideration charged for single consignment is less than 1500 RS. than service from GTA is exempt
-If multiple consignment carried by transporter and consideration for single consignee not exceeds 750 RS. than service from GTA is exempt
APPLICABILITY OF GST
Services by way of transportation of goods by road except the services of
(i) a goods transportation agency
(ii) a courier agency
are exempt from GST
– Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017,effective from 1-7-2017.
Thus, all transport of goods by road is exempt except in case of GTA and courier services.
DEFINATIONS
Meaning of’Goods Transport Agency’ –
“Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
– para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
Courier Agency –
“Courier agency” means any person engaged in the door-to door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles.
– para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
RATE OF GST
The GST rate in case of service supplied by GTA on transportation of goods(including used household goods for personal use) is 5% (CGST 2.5% and SGST 2.5%) orIGST 5%.
ITC of input services or goods is not available to GTA – Notification No. 11/2017-CT (Rate) and No. 8/2017-IT (Rate)
both dated 28-6-2017, effective from 1-7-2017.
Note that the condition of non-availment of ITC is applicable where GTA himself is liable to pay tax and not where the recipient is liable to pay GST underreverse charge.
Thus, once the recipient pays GST @ 5% (2.5% plus 2.5%) on reverse charge basis, he can avail its input tax credit.
RATE OF GST
Option to pay GST @ 12% underforward charge:
The GTA has option to pay GST @ 12% [6% plus 6%] under forward charge.
In that case, the GTA can avail Input Tax Credit. Since the GTA himself will be paying tax, the recipient is not liable to pay GST underreverse charge [amendment w.e.f. 22-8-2017].
GTA who are having their own vehicles and having huge Input Tax Credit on capital goods may find the option useful. This option may also be suitable for freight forwarders who are providing composite services of packing, clearing and transportation from source to destination basis.
Reverse charge in respect of GTA services
In case of services of Goods Transport Agency (GTA), the service recipient is liable in most of the cases, as per Notification No. 13/2017-CT (Rates) and 10/2017-IT (Rates) both dated 28-6-2017, effective from 1-7-2017, except where the GTA opts to pay tax under forward charge @ 12%.
Person paying freight to GTA is liable to pay tax under reverse charge
The person who pays oris 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 forthe purpose of this notification.
Exemption to service provided by GTA to unregistered person (other than where reverse charge applies):
In case of services supplied to unregistered person by GTA (other than where reverse charge applies), the service is exempt w.e.f. 13-10-2017.
In case where service is provided by GTA to factory, society, company, partnership firm orregistered person, the recipient is liable to pay tax.
Where GTA provides services to unregistered person, service is exempt.
Thus, after 13-10-2017, the GTA itself is neverliable to pay tax, except where the GTA opts to pay tax under forward charge @ 12% [6% plus 6%].
Till 13-10-2017, GTA was liable to pay GST in following cases –
(a) when recipient of service is unregistered individual person
(b) transportation of household goods when the freight is paid by unregistered individual person
(c) Services supplied to person located outside taxable territory (like transport to Bhutan, Nepal, Bangladesh) where
the recipient is paying freight.
Mere bill is not consignment note –
In Nandganj Sihori Sugar Co. v. CCE (2014) 46 GST 570 , it was held that consignment note issued by GTA represents its liability to – (a) transport consignment handed over to it to destination (b) undertake delivery of same to consignee and (c) temporarily store till delivery. Mere bill issued for transportation of goods cannot be treated as a Consignment Note.
Service provided by person who does not issue consignment note is not taxable
If driver of goods carriage is self-employed either by taking vehicle on rent from other or as owner of one or two vehicles, he does not issue any consignment note. He has direct contract with consignor/consignee. He him self receives freight from consignor/consignee. He would not be liable to GST. Only GTA which issues a consignment note is liable to GST tax.
Exemptions in respect of goods transport of specified goods
Services provided by a goods transport agency, by way of transport in a goods carriage of following are exempt from GST –
(a) agricultural produce
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed Rs. 1,500
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty
(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 meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipment
– Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
Exemption to supply of services to transit cargo to Nepal and Bhutan
Supply of services associated with transit cargo to Nepal and Bhutan (landlocked countries) has been exempted. – Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) as amended on 29-9-2017.
Exemption to service of giving vehicles on hire to GTA
Services by way of giving on hire to a goods transport agency, a means of transportation of goods is exempt from GST – Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate), effective from 1-7- 2017.
Thus, there is no GST on vehicles given to GTA on hire (as many GTA do not have their own vehicles).
Author Bio
Can a Transporter bill from their main office for the services across other states…ie., if their main office is in Mumbai, the provide transport services from bangalore to Hyderabad, can they bill centrally from their Mumbai office based on their MH registration , if yes, any notification on this . Kindly confirm
I am a manufacturer and deliver goods to my customers by my own vehicle.do I have to necessarily charge transportation to customer or show appropriate charges and are such charges taxable gst.
Iam transport commision agent providing GST bill. Usually transporting military person’s used house hold item to one location to another while their transfer or retairment stage. Is it required to charge GST along with thier transport bill to the client.I am usually filing GST as exmpeted unit
Well discussed, very useful
I am central govt employee. I transferred my old household used items through truck in 2019., by a transport company. Now audit inspection ordered for recovery of all amount, which was given to me.Because no gst was paid by me. Is gst applicable or not. Office order for recovery of all disbursed amount. Plz give me letter, in which it is said that it is not taxable
@Mahesh Kumar Sharma, did you get any letter/order regarding exemtion of gst on used household goods? what did you do? what reply have you given to Audit Party ? was the amount recovered? Someone from my ofifce also facing the same problem. can you or anyone please help. thank you in anticipation.
We are the transporter under GTA and issuing C.N accordingly & making the bill to the party @12%GST under FCM. We are hiring the vehicles from an another Service provider ( XYZ ) in bulk quantity daily basis but XYZ is not the broker. XYZ is also taking the vehicles from the direct fleet owners of open market Now please let us know that whether the XYZ can charge 12% GST under FCM in his bill to us.
sir what is GST % of goods transportation by road transport charges 8000/-
I am a GST Registered Service provider(GTA) and issuing consignment note.
If i provide service to a Government organization and transport election related goods from one state to another state, should i Charge GST or it is exempted ? If exempted under which section it comes? consignor/Consignee not providing GST Registration number.Please reply
For SAC Code -996601, What GST rate is applicable for transportation service by GTA on RCM basis means GST is payable by recipient?
If “ABC Pvt. Ltd.” is giving Road Transport service (Local) to Ecommerce company and taking the Transport Vehicles from “XYZ Enterprises-Proprietorship firm)” at monthly fixed rate. What will be the GST implication ? At what GST rate “XYZ enterprises” will raise his monthly bill to “ABC Pvt. ltd.”
It wOULD BE BETTER IF THE AUTHOR INFORMS HOW A GTA WILL FILE RETURN IF HE ADOPTS PRACTICE OF RCM
please comment on case law reported in KM Logistics(P)Ltd 2020-117 taxmann 609, where it was held by AAAR Rajasthan that carrying vehicles from manufacturers factory to dealers:consignment note is only a document by which responsibilities and rights are reduced in writing and is non issuance does not affect rights of parties,hence GST on service provided by GTA cannot be avoided by mere non-issue of consignment note.
If supply of transportation services to registered person but fake invoices made on the name of unregistered person and payment in cash is being shown in books of account.
than as per definition of consideration that consideration has been paid either by receipient or any other person .than In this case supply of transportation services to registered person is taxable with penalty, interest and other amount ???