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.
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
|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.
(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;
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.
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%
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. 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|
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.