All about Goods Transport Agency Services under GST

Service of transporting goods plays a very vital role in trade channels, being a huge part of economy it bears the straight impact over the business and trade. Taxing the transportation service whether provided in water by means of vessel, by road, by train or by a courier agencies has always been a contentious issue especially taxation of transportation by road.

There can be various ways to transport goods and it can be majorly divided into the following categories:

  1. Transportation of Goods by Rail other than goods in containers by rail by any person other than Indian Railways,
  2. Transport of goods in containers by rail by any person other than Indian Railways
  3. Transportation of Goods in a Vessel,
  4. Transportation of goods via road by Goods transportation agency (GTA)
  5. Transportation of goods via road by other than Goods transportation agency (GTA)
  6. Transportation of Goods by courier agency
  7. Transportation of Goods a parcel

In this article I would explain all about the position of service of Transportation of goods via road by a Goods transportation agency (GTA) in context of newly introduced Goods and services Tax

Particulars Remarks
Who is a GOODS TRANSPORT AGENCY?

The Supplier has to be a Goods Transport Agency and

As per clause (ze) of notification no.12/2017-Central Tax (Rate) of Central Goods and Services Tax Act 2017 dated 28.06.2017.

“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;

The term consignment note has neither been defined in the CGST Act nor in the notification under this act but meaning can be drawn from the explanation to rule 4B of the Service Tax Rules, 1994 the term Consignment note has been explained as “consignment note” means a document, issued by a transport of goods against the receipt of goods for the purpose of transport of goods 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 goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.”

So in the light of the above it can be concluded that the transporter shall be called a GOODS TRANSPORT AGENCY (GTA) only if it transports goods by road and issues a consignment note.

Payment of Tax under Forward charge,

Applicable Tax Rate and availability of Input Tax Credit

Where the GTA is rendering service to person other than specified recipient who are required to pay tax under reverse charge, the tax shall be payable by the GST Service Provider either at the rate of

5% – Provided that input tax credit as charged on goods and services used in supplying the GTA service has not been taken by the GTA service provider.

Or

12% – Provided that credit of input tax charged on goods and services used in supplying the service has been taken by the GTA and, thenceforth, GTA shall be liable to pay tax at 12% on all the services of GTA supplied by it.

At the option of the service provider. If the option to pay tax at 12% has been opted by the GTA then conditions of reverse charge shall not apply, and GTA would be only liable to pay tax in forward charge.

Payment of Tax under Reverse Charge

Yes , where GTA who has not paid tax at the rate of 12 % and is rendering GTA services to any of the following recipient

• 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 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;

• any body corporate established, by or under any law;

• any partnership firm whether registered or not under any law including association of persons; or

• any casual taxable person

the liability to pay tax shall be that of the recipient of services at the rate of 5%. The credit of tax paid under shall be available to service recipient if the service is used in the course of furtherance of business.

Further 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 for the purpose of applicability of reverse charge

Relief from liability to register under this act to GTA service provider As per Notification No. 5/2017 – Central Tax dated 19th June, 2017 If a GTA Service provider is making supply of GTA services only to the service recipients who are liable to pay tax on GTA services under reverse charge, such GTA service provider shall be exempt from taking registration under this act.
Inward service to a GTA exempt under GST As per Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 Services by way of giving on hire a means of transportation of goods, to a goods transport agency is exempt
Treatment of any services provided in relation to transportation of Goods by GTA The phrase ‘in relation to’ used in the definition of goods transport agency has extended the scope of the definition therefore here a GTA provides any other services like trans-shipment, packing/ unpacking loading/unloading etc., but all the other service provided are in relation to the successful provision of the main service which is that of transportation of Goods, so therefore all these service which are provided in addition to the transportation services shall be covered under the ambit of GTA service along with the principle service, further the taxation and valuation of these service shall not be as per the principal transportation service and not as per the individual service.
Exempt services by Goods Transport Agency Services provided by a goods transport agency 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; or

• Defense or military equipments.

What is the status of Transport of goods via road but who does not qualify to be a Goods transportation agency (GTA) under GST As per Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 the Services provided by way of transportation of goods by a person other than a goods transportation agency shall be exempt from Goods and service Tax.
Point of Taxation The time of supply for GTA services shall be the earliest of the following where the tax is payable by GTA

• the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under i.e. 30 days from completion of service

or

the date of receipt of payment, whichever is earlier;

OR

• the date of provision of service(if the invoice is not issued within 30 days of completion of service)

or

the date of receipt of payment, whichever is earlier;

OR

• the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of either of the above clause do not apply

Where tax is payable by recipient of GTA service under reverse charge

the time of supply shall be the earlier of the following dates, namely:

• the date of payment as entered in the books of account of the recipient

or

the date on which the payment is debited in his bank account, whichever is earlier;

OR

• the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the GTA service provider

• Provided that where it is not possible to determine the time of supply as per above stated causes, the time of supply shall be the date of entry in the books of account of the recipient of supply

Place of Supply For the GTA the place of supply shall be

• Where the location of Supplier and location of Recipient is in India

o Be the location of registered person if services are rendered to a registered person

o Be the location where goods are handed over for transportation is services are rendered to a unregistered person

• Where either the location of Supplier or the location of Recipient is in outside India

o Be the place of destination of goods

So, from the above it is apparent that every transporter cannot be termed as a Goods Transporter Agency, and, the GST law is in line with the Service Tax regime. And it has been taken care of by the law makers that GTA or transporters of goods are majorly belonging to the unorganized sector and therefor they have been deliberately kept away from the compliance and tax burden and wherever the tax nets has been extended they are kept away from the compliance burden by putting liability on the recipient.

Author Bio

Qualification: CA in Practice
Company: D C J & Co
Location: Delhi, New Delhi, IN
Member Since: 12 Sep 2017 | Total Posts: 3
I am Practicing Chartered Accountant, Partner in D C J & Co Chartered Accountant. I have been deliberating on various forums, trade associations and Government departments. I have been the trainer to CBEC for GST Front end and Back end application training View Full Profile

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8 responses to “GST on GTA Services- Complete Guide”

  1. tmparikh says:

    Rent received in the month of April 17 for the whole year, Service tax has been paid on the whole amount, What are the implications under GST now?

  2. Jigar says:

    Dear Sir,
    Very good informative article. My Co. is in Gujarat. We have a depot / customer at different states of india. We have contract with various transporters in Gujarat/Out side Gujarat. What is Place of supply ?
    1. Goods from where it is picked up ?
    2. Goods where it needs to be delivered ?
    3. Place of Registration of My Co. i.e. Gujarat ?
    4. Place from where transporter is billing i.e. his registered office ?

  3. sudhirjogani says:

    Dear Sir
    Please let me clear if the goods are booked from Delhi to Assam to the registered person and the freight is paid at the time of delivery in Assam. Whether the registered person in Assam shall pay tax under reverse charge as IGST or CGST/SGST.

  4. RAJA GHOSH says:

    Dear Sir,
    I have gone through your article on the Taxing provisions
    in respect to GTA Services under GST Act.
    Its very nice reading the article.
    Clear on doubt :
    Point of Taxation in the Case of RCM in GTA is the earliest of :
    a) 60 days from the invoice date
    b) Payment is received & entered in the books of the provider of Service
    c) Amt is debited from the bank a/c of the recipient of Service
    Where it could not be determined in the manner as stated above,
    Point of taxation would be the date when the transaction is recorded in the books of the recipient of Service.
    Now, What if the transaction is recorded in the books of account of the recipient of Service prior to
    Time specified in point a to c above.

    • cautsavdogra says:

      The proviso ” Provided that where it is not possible to determine the time of supply as per above-stated causes, the time of supply shall be the date of entry in the books of account of the recipient of supply” is relevant only if the date from A to C cannot be determined

  5. Sarvesh says:

    Whether GTA can avail both the facilities – reverse charges as well forward charges to different service receipents.

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