Conundrum of Goods Transport Agency ( GTA) in GST
Q1 . What is a Goods Transport Agency ? Why is it Important?
“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.
All other means of goods transport by road enjoy exemption from GST other than courier services.
Q2. What are the 2 necessary limbs to Qualify as a GTA ?
“Goods Transport Agency” must issue a consignment note and there should be an agency relationship i.e. transportation of goods on behalf of somebody else i.e. the consignor or consignee.
Q3. Whether a person transporting goods on his own vehicle to his customer be liable to GST ?
Any supplier transporting any goods from his premises to his customer’s premises using his own vehicle ie a Truck, Tempo or Cars shall not be subject to GST as there is no element of Agency and hence exempted fron GST.
Further Para 149 of Budget 2004 of the speech of Honble Finance Minister has clarified that there is no intention to levy service tax on truck owners or truck operators.
Q4. What is the status of GTA under the GST Law ?
Services of transport of goods by road is a taxable supply and hence liable to GST.
Q5. Which tax is leviable CGST/SGST or IGST on transportation of Goods By Road ?
The tax to be charged on supply of GTA services shall depend on the Place of suppy of services as defined under the IGST Act.
As per the provisions of this Act where the location of supplier of service and Location of Recipient of service ( if Registered) ie the person liable to pay the consideration are in the same state, it shall be considered as an Intra State Supply leviable to CGST and SGST.
And if the location of supplier of service and Location of Recipient of service (if Registered) ie the person liable to pay the consideration are in the different states, it shall be considered as an Inter State Supply leviable to IGST.
Q6. Which is the rate of GST on Goods Transport Service ?
The rate of GST on goods transport Service is 5%. The supplier of the service shall not be entitled to credit of ITC.
This provision has been proposed to be made more flexible in the recently concluded GST Council Meeting held on 5th August 2017 in which the rate of GST has been proposed to be increased to 12% with full ITC at the option of the supplier of services.
Q7. What will be the rate of GST on GTA services where a manufacturer, Distributor, Wholesaler or trader etc uses the services of GTA to transport goods which is recovered from the customer?
In the above scenario where the supplier hires a GTA to transport goods, it shall be considered to be a composite supply under the GST Law. The value of GTA charges shall be added to the value of Goods and the entire amount shall be subject to GST at the rate at which the goods are taxed under the GST Law.
Q8. What will be the rate of GST on GTA services where more than 1 type of goods with different GST rates are being transported in a goods carriage in the above case. ?
In the above scenario where the supplier hires a GTA to transport more than I type of goods having different GST rates , then there are two alternatives :
Alternative 1 : Allocate the amount of transport charges in the ratio of value of goods and charge GST on the value so arrived at the rate at which those goods are taxable under the GST Law.
Alternative 2 : The value of GTA charges shall be added to the value of Goods and the entire amount shall be subject to GST at the higher of the rates at which the goods are taxed under the GST Law.
Q9. Are there any exemptions from payment of GST on GTA services :
Yes exemption is available from payment of GST where the value of consignment does not exceed Rs. 750/1500 as the case may be.
Further there are exemptions from payment of GST on transportation of specified goods including agriculture related products.
Renting of Vehicles meant to carry more than 12 passengers to a GTA shall also be exempt.
Q10. Whether GST on GTA services is required to collected and deposited by the supplier or recepient :
The GST on Goods Transport Agency Services shall be paid under Reverse Charge as per section 9(3) and 5(3) OF CGST Act and IGST Act respectively by the person liable to pay the freight to the supplier where the person liable to pay freight is
Q11. What are the other compliances which are required to be followed by the person liable to deposit GST under reverse charge ?
The recipient of service shall raise a tax invoice as and when it receives the GTA services. Also he shall issue a payment voucher to the supplier. The GST under reverse charge is required to be deposited in cash only and ITC shall not be available. Further he shall reflect the taxes paid under reverse charge in his GSTR-2.
Q12. Is the Threshold exemption of Rs.5000/- for purchases made from unregistered dealers in a single day also applicable on GTA services.
No. The threshold exemption is available only for supplies specified under section 9(4) and 5(4) of CGST Act and IGST Act respectively. GTA services fall under sections 9(3) and 5(3) of CGST Act and IGST Act respectively and hence no exemption is available.
Q13. Is there an option to raise a consolidated invoice at month end as provided for expenses from unregistered dealers in other cases?
No the option to raise a consolidated invoice at month end is not available in case of reverse charge on GTA Services as these are covered by sections 9(3) and 5(3) of CGST Act and IGST Act respectively and not by section 9(4) and 5(4) of CGST Act and IGST Act respectively.