GST on the GTA Service/Transport Service

Introduction :– Transportation of goods from one place to another palace is the normal economic activity, in the India, there are huge no of trucks/Lori etc. for the transportation of the goods being vast area of our country whereas some state/location are main manufacturing hub such as Gujarat, tamilnadu and Himachal Pradesh due to good facility as well as tax exemption whereas on second side other part of the country are consuming state, so transportation is mandatory for the sending goods to other place. In India. Due to vast nature of the services provided by the transport industry, the service tax was first chargeable inn this industry and now in the GST Era, same is continue with certain exemption as well as relaxation. Initially it was under the RCM later on also allowed in the forward charges due to industry demand by the council.

Goods Transport Agency

GTA Meaning :- CGST Act doesn’t not defined the definition of the GTA, however the notification 12/2017 dt.28-07-2017 CT(Rate) under para 2(ze) states GTA as follows

(ze) “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.

It is clear from the above definition, that issue of consignment note/bilti is mandatory for the coming in the definition of GS for the goods transport agency/person having work for the transportation on individual basis, f

Consignment Note :– consignment note/bilti is not defined in the CGST Act but as per Rule 54(3) of CGST Rule,2017 

A consignment note is serially numbered and contains –

a. Name of consignor

b. Name of consignee

c. Registration number of the goods carriage in which the goods are transported

d. Details of the goods, description, quantity, volume.

e. Place of origin

f. Place of destination.

g.. GSTIN of person liable to pay GST – consignor, consignee, or the GTA.

h. Other information as mentioned in rule 46 like date of issue, Value of goods, serial number etc.

Issue if GC note fastens liability on the GTA service provider. He is considered as Bailee of the goods handed over to him for transport by consignor. It also provides right of lien on goods to recover the freight charges. Normally GTA cover the liability by taking insurance on the goods under general cover. If a consignment note has been issued by the transporter, it implies that the lien (i.e. the right to keep possession of property) of the goods has been handed over to the transporter and that the transporter has now become accountable for the safe delivery of the consignment to the consignee

Exemption for the GTA in the GST on services provided by them :-

S. No. Heading Particular’s Tax
18 9965 Services by way of transportation of goods- (a) by road except the services of— (i) a goods transportation agency; (ii) a courier agency; (b) by inland waterways. Nil
21 9965 or  9967 Services provided by a goods transport agency, by way of transport in a goods carriage of –

(a) agricultural produce.

(b) 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.

(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’s.

Nil

(d) “agricultural produce” means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market;

GST Rate on the GTA Service ;-

There are two type of Rate on the GTA Service, exempt is mentioned above, one is reverse charge and second is forward charge i.e. as per the normal practice of GST.

Reverse Charge Rate and details in the GTA :-

First of all, lets refer to the Notification No. 13/2017 of Central Tax (Rate) dated 28th June 2017 as amended from time to time which deals with the Reverse Charge Mechanism RCM). The item 1 of this notification states that the whole of GST leviable on under section 9 of CGST Act 2017, shall be paid on reverse charge basis by the recipient of supply of services by a goods transport agency (GTA) in respect of transportation of goods by road to:

1. any Factory registered under or governed by the Factories Act, 1948

2. any Registered Society

3. any Co-Operative Society established by or under any law; or

4. Any Company

5. any Partnership Firm.

6. Association of person.

7. any GST registered person.

So, if the GTA services are provided to person mentioned above (a-g), the recipient of the such DTA services would be liable pay GST on Reverse Charge basis. It is to be noted that Individuals & HUF recipients are left out from the applicability of RCM unless they are registered under GST Act.

The rate of tax on such GTA Services under RCM basis would be 5%

Service Tax on the Forward Charge basis :-

when the tax payable on GTA Services is under RCM basis, the supplier of such services is not eligible to avail any input tax credit in relation to the provision of such services and it had created a huge issue immediately after the roll out of GST in 2017. These suppliers themselves get a large amount of taxable supplies and also capital goods etc. chargeable to GST at the rate as high as 28%. The goods transport industry representatives requested the government to allow GTA to charge GST on forward charge basis as well and on their representations the government issued the Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017. This notification provides that if the goods transport agency opts to pay the tax on forwards charge basis then, such GTA would be liable to pay central tax @ 6% on all the services of GTA (including used household goods for personal use) supplied by it. So, the tax rate on GTA services on forward charges basis was fixed @12% (6% CGST & 6% SGST).

If GTA opts to charge tax on forward charges basis then the service provider & services recipient, both would be eligible to get the input tax credit.

If both are summarized, then GST on the GTA will be as follows :-

Notification No Particulars
Notification No. 12/2017 of Central Tax (Rate) dated 28th June 2017.  GTA exempt from GST
Notification No. 13/2017 of Central Tax (Rate) dated 28th June 2017 RCM on GTA 5%
Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017 Further allowed forward charge 6% on the service of GTA

FAQ or Clarification :-

  • it is to be seen that mere transportation of goods by road, unless it is a service rendered by a goods transportation agency, is exempt from GST.Therefore, Individual Truck /Tempo Operators who do not issue a consignment note are also covered by above exemption.
  • COMMISSIONER CENTRAL EXCISE VERSUS M/S KISAN SAHKARI CHINI MILLS LTD. AND ANOTHER-2017 (3) TMI 1786 – ALLAHABAD HIGH COURT held that  The term “consignment note”has no magical or technical meaning looking to the very purpose and intent of legislature in the matter.- SLP filed by KISAN was dismissed as reported in 2017 (3) TMI 1786.Hence any document similar to GC note will hold the transporter as GTA service provider unless proved otherwise on facts
  • Services provided by a GTA to an unregistered person other than the above seven entities shall be subjected to NIL Rate under GST and hence exempted. (As per Point No-c of Notification no-32/2017(CGST Rate),13.10.17 (Serial No-21A under Heading 9965)
  • If GTA is unregistered, then RCM is applicable.
  • if any intermediary and ancillary service is provided in relation to transportation of goods by road, and charges, if any, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply. In fact, any service provided along with the GTA service that is part of the composite service of GTA shall be taxed along with GTA service and not as separate supplies. However, if such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies.
  • In case the GTA service supplier hires any means of transport to provide his output service, no GST is payable on such input service.
  • Q – I own a single truck and I rent it to a major player, who provides GTA service; should I take a registration? Does my monthly rental/lease income attract GST?
  • Registration is not required since services by way of giving on hire, a means of transportation of goods to a GTA are exempt from tax vide Entry No. 22 of Notification number 12/2017 – CT (R) dated 28th June, 2017
  • There are large number of business & organization who either deals in exempt goods only or do not have to get themselves registered. If such entities avail any GTA services where the amount consideration charged for transportation exceeds the limit of Rs. 1500/Rs.750 as the case may be, then such service recipients should try to avail services from GTA who charges GST under forward charge basis, otherwise they would be liable to get the GST registration and pay GST under RCM.

Place of Supply for Goods Transport Agency: Section 12(8)

a) If the supply is B2B then the Place of Supply  will be the location of the Recipient

b) If the supply is B2C then the Place of Supply will be the location at which such goods are handed over their transportation.

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6 Comments

  1. B K Sharma says:

    Applicable GST on Transport Service Assessing officer impost tax on my transport service please clear.

    Regards,
    B.K. Sharma
    9319577558

  2. K.N.RAJAN RAJAN says:

    My supplier sent goods from Tamilnadu to Pondicherry on 24th march (COVID period. But it was not entered Pondicherry. Hence it was returned to Supplier. But the Goods Transport charging for two ways. How can Supplier or buyer treat this as GTA?

    1. CA Ram Bajaj says:

      Ranjan Ji, GST applies once condition are satisfied for the attracting the GST, there is no specific notification for the issue addressed by you, so it is advice to paid/RCM in both the cases

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