As per Finance Act 1994, ‘Goods Transport Agency (GTA)’ means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

The Finance Act, 1997 had levied Service Tax on Goods Transporter in 1997 which was subsequently withdrawn after nation-wide strike. Finally, levying service tax on Transport of Goods by Road is made w.e.f. 01.01.2005.

The GTA service is enumerated under reverse charge notification no. 30/2012 dated 20.06.2012. As per the notification, full service tax shall be paid by the person liable for paying service tax other than the service provider after considering abatement. The abatement for GTA service as given under notification no. 26/2012 Dated 20.06.2012 as amended from time to time is 70% and therefore 30% of service tax is liable to be paid. In fact, the abatement ratio has been amended vide notification no.8/2015 dated 1st March, 2015 and the change of abatement from 75% to 70% is w.e.f.1st April, 2015. The said abatement is eligible subject to the conditions as amended in the said notification. The extract of the condition is depicted below for reference –

‘CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.’

As per Service Tax Rules, 1994, the person who pays or is liable to pay freight, either himself or through his agent, for the transport of goods by road in a goods carriage, has been made liable to pay service tax. But, if the person liable to pay freight is located in non-taxable territory, then the person liable to pay service tax shall be the service provider.

A provision exists in Service Tax which exempts the taxable service provided by a goods transport agency to a customer, from the whole of service tax, in such cases where,-

  • the gross amount charged on consignments transported in a goods carriage does not exceed rupees on thousand five hundred or
  • the gross amount charged on an individual consignment transported on a goods carriage does not exceed rupees seven hundred fifty.

For the purpose of this provision, “an individual consignment” would mean all goods transported by a goods transport agency by road in a goods carriage for a consignee.

(The above article is authored by Ganeshan Kalyani and he can be reached via email on gganeshan.k@gmail.com)

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54 responses to “Service tax under reverse charge mechanism on Goods Transport Agency (GTA)”

  1. amit says:

    HI,

    A registered dealer in Orissa is transporting good from orissa to UP and GTA is from MP. Now registered dealer need to pay tax on RCM basis and also use ITC. Which tax he will deduct CGST, SGST or IGST on RCM invoice?

    IF destination is not in UP but Orrisa than what will be the answer?

    If service provider is from orissa not from mp than what?

  2. Gaurav Agrawal says:

    sir i have rececived a service tax notice and difference they are tearting as a commision of me and gave me intimate to pay on service tax on it.
    I m not understanding that is not my commission .

    we are providing the transportation service by road and issuing consigment note to the party which act as transporter.

    we are not having any truck but from market through broker we arrange and supply to pvt. ltd. co. for transportation of there goods and tds will be deducted under sec.194c of me

    The payment received from party to me fully on my account and from that i paid to owner driver of truck.

    my question is that the diffence of margin is act as commision to me or not and i have fully authority to change my rate as per my accordingly.

    sholud i cover in defination of GTA (GOODS TRANSPORT AGENCY) by fulfillment of condition 1.

    whether differnce of margin act as commission on which service tax is liable.

    AS per sec. 68 REVERSE CHARGE MECHANISM TO ME AS I PROVIDE SERVICE TO PVT .CO.

    I received a notices from Service tax officer said that margin for me is commission and we are liable to pay servicce tax on it.

    AS per Intermediary defination by Rule 2(f) IT EXCULDED ME

    i only providing main service of transportation of good to service to consignor and consignee on my account as firm name.

  3. pankaj says:

    sir mai ek truck owner hu mere pass agar truck available nhi hota tho mai kisi or transporter ka laga deta hu badle mai mujhe 1000 rs ka commission bhi milta hai kya mai soch rha hu ki wo commission exempt hai par mujhe koi notification nhi mil rha hai. please hepl me

  4. priyanka says:

    If the consignment note doesn’t charge service tax, whether at is payable under reverse charge?

  5. Ashish Shah says:

    if XYZ taking airfreight service from ABC & ABC raised bill without Service tax (RCM 4.5%) to XYZ then XYZ is labial to pay service tax (RCM 4.5%)?

  6. VENKATESH says:

    We are the service providers for Corporation Units under service Tax @ 15% but recently they were telling that under REVERSE TAX MECHANISM THEY pay only 7.5% and paid also at the same. Is it OKAY? My question is how it reflects in ST3 form when we fill ST returns and where is that row/column will show in ST3 form. Pl explain.

  7. Dinesh Kumar says:

    A sold goods to B with included freight and A received transport service from C but now C has not his own transport so C taken transport service from D, Now who will pay service tax and how?
    please reply as soon as possible

  8. SARASWATHY VENKATESAN says:

    ABC LOGISTICS COMPANY ENGAGES XYZ LOGISTICS COMPANY FOR TRANSPORTATION OF GOODS TO ITS CUSTOMER.
    CONSIGNMENT NOTE IS ISSUED BYABC
    XYZ GIVES VEHICLE AND DRIVER AND GETS PAID FOR THIS.
    QUESTION -WHAT IS THE CATEGORY OF SERVICE PROVIDED BY XYZ
    WHAT IS THE SERVICE TAX LIABILITY ON XYZ

  9. devendra says:

    my vendor has supplier me trading meterials rs. 11250 include Vat & charges transportation charges Rs .300, is it applicable GTA service or RCM ?

    • Ganeshan says:

      You need to check whether freight is payable by you or your vendor. When vendor has charged freight on invoice then it means he has paid it and recovering it from you. In this case he is liable to pay Service tax under reverse charge. If as per agreement you are liable to pay freight and your vendor has just paid it on your behalf then you are liable to pay service tax.

  10. Mamendra Sahu says:

    Respected Sir,
    In Which transportation exp. amount Limit RCM applicable.
    for. eg. for a construction co. googs transportation charges paid Rs 1000
    is it RCM chargeable or not?

  11. PIYUSH DOBARIA says:

    Dear Respected

    with refrence if seller company is pvt ltd and buyer company also pvt ltd and material is totaly tax exempt and transportation paying bay seller company in this case who is liable for service tax

  12. BHAVESH RANGANI says:

    Dear Respected

    if seller company is pvt ltd and buyer company is pvt ltd and transportation paying by seller party so,in this case who is liable to pay service tax.

  13. H K says:

    Sir,
    A Company as GTA Service receiver takes abatement and pays Service Tax in Inward Freight of material.
    However, after manufacture of finished goods, sells the same without charging for Transportation, and delivers the finished goods at buyers store/godown/premises after charging excise duty, Will the Company have to pay service tax as Service Receiver on Outward Freight cost also?
    Seems like it would be a double charge…as company has factored in the cost of transportation in the selling price and charged excise duty on it.
    Please reply with your view on the matter.
    Thank you in advance.

    • Ganeshan says:

      Freight is paid while bringing the material into the factory. Service tax is payable on this freight. Further after manufacturing when the goods are sold then if freight is paid by you to deliver the finished goods to customer place then you are liable to pay service tax. This is called outward freight .

  14. VENKATESH says:

    PARTNERSHIP FIRM IS LIABLE TO PAY GTA

  15. GOPINATH says:

    DEAR SIR,

    AM RUNNING GOODS TRANSPORT AGENCY AS WELL AS HIRING SOME TRUCKS FROM OTHER AGENCY AND LET THEM TO HIRE TO CUSTOMER. FOR THAT AM RECEIVING INCOME FROM CUSTOMER AND GIVING BACK TO THAT OTHER AGENCY THEN THAT OTHER AGENCY GIVING ME COMMISSION.

    AM ALSO RUNNING WITH VEHICLE AND ALSO ACT AS COMMISSION AGENT. AS GTA AM EXEMPTED FROM SERVICE TAX LIABLITY.

    BUT AM RECEIVING COMMISSION RIGHT FOR THAT SHALL I LIABLE TO PAY SERVICE TAX ??

    IF YES, CAN I TAKE SMALL SERVICE PROVIDER EXEMPTION??

    IF YES, ON WHICH VALUE I SHOULD CONSIDER FOR SSP EXEMPTION?? ONLY PORTION OF COMMISSION INCOME OR VALUE RECEIVIN FROM CUSTOMER??

    KINDLY GIVE ME CLARIFICATION ON MY ALL QUESTIONS STATED ABOVE…

    I HOPE YOU WILL HELP ME AS SOON AS POSSIBLE.

    THANKS IN ADVANCE.

  16. Dhavan Singh says:

    Hi,
    Is RCM applicable if we transport goods by Auto.

  17. Ashok Sharma says:

    if service provider and receiver both are limited company under GTA then who is liable to pay service tax ?

  18. anil says:

    Railway admn. is hirng trucks and MUV for day-to-day maintence work on montlhy rental basis. Is deduction of service tax is required to deducted from their bills. If yes at what rate. Please clarify.

  19. Ankur Goenka says:

    Whether Consignment note in respect of GTA Service to be prepared challan wise or truck wise. And, how will be the benefit of exemption notification 25/2012 would be available in such case…?

  20. rajat agarwal says:

    In case of goods transfer to branch by road , we liable to pay service tax?

  21. Udit Khera says:

    A Goods Transport agency Abc Transport provides Goods transportation service to XYZ limited and has charged service tax on 30% of the value of service on Invoice and the same was paid by receiver of service to agency like in case of a normal provision of service.
    Is the company still liable to pay ST under reverse charge mechanism?

  22. B Chandra says:

    A Supplier charged freight in the invoice. In this do i need to pay Service tax under RCM for the freight amount.

    • krishnakant patil says:

      no…if supplier charge service tax on basic amount in the bill than u don’t have to pay service tax under reverse charges.

  23. Sam Dhaania says:

    Is cenvat credit allow on any of the services (i.e. Internet expenses, Telephone Expenses etc) in case of transporter??

  24. SULEMAN MEHRAZ says:

    what will be the accounting treatment in the books of gta???

  25. Jay Shah says:

    Dear sir,
    We are exporter and send good from factory to port. Our GTA charges service tax on it? What stand we should take?

  26. sandeep says:

    Dear sir
    If Gta service received by service provider(software com) as registerd as service service provider then RCm on gta applicable, as we know software registerd 68(1) provider not catgoery of 68(2) receiver

  27. suresh says:

    If GTA raise bill including service tax, then what is the amount paid by consignor to GTA. In this case consignor is paying freight.If consignor is remitting service tax to the department, at what percentage it will remit? GTA raised invoice of Service tax@30%.

  28. K N AGRAWAL says:

    Clearing Agent is Pvt LTD Co and hire GTA for his client who is also A Pvt ltd.
    Clearing Agent paid Freight charges to GTA and recovered the Freight amount from his client through his Billing.

    Now in this case who is liable for Service tax under reverse charge mechanism on Goods Transport Agency (GTA)

  29. CHIRAG BISCUITWALA says:

    FACT:
    ABC, a partnership firm is engaged in goods transport agency business providing issuing LR and collecting freight from consignor or consignee, as per their mutual agreement.

    ABC, transporter is not having any goods carriage on his own. It arranges the goods carriage and pay the rent for the same. The Transporter is issuing the Invoices in its name for the total value of Freight and do not mention in the Invoice regarding the ownership of the goods carriage or any reimbursement of the freight to the Goods Carriage owners. The consignor or the consignee is paying service tax if they are liable to pay service tax on reverse charge basis. In remaining cases the transporter is paying the service tax.

    Question 1 : Whether the Transporter is required to pay service tax as a service receiver from the owner of these goods carriages as it is paying freight to the goods carriage owners after keeping its margin from the freight which it collected from consignor or consignee ?

    Question 2: If the consignor or the consignee is liable to pay freight on reverse charge mechanism and is not providing its Service Tax Registration Number, what should transporter do to avoid unnecessary complications in future?

  30. Ganeshan says:

    As per provision in service tax, the consignor or consignee whoever is making payment towards freight would be liable to pay the service tax. Since ABC is arranging transport for XYZ then XYZ would be paying the freight and therefore the liability of service tax lies on XYZ.

  31. GAGANDEEP SINGH says:

    WHEN ONE TRANSPORTER PROVIDING SERVICE TO ANOTHER TRANSPORTER (i.e GTA TO GTA) WHAT IS THE STATUS?

    SECONDLY GTA TO CLEARING AGENT, STATUS OF APPLICABILITY OF SERVICE TAX?

    • Ganeshan says:

      GTA service provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,-
      (a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
      (b) 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;
      (c) any co-operative society established by or under any law;
      (d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;
      (e) any body corporate established, by or under any law; or
      (f) any partnership firm whether registered or not under any law including association of persons;

      Hope this solves your query

  32. Gaurang Agarwal says:

    Is service tax payable by the newspaper house which gets its newspapers carried to different places through transporter every morning?

    • Ganeshan says:

      Services provided by a goods transport agency, by way of transport in a goods carriage of newspaper or magazines registered with the Registrar of Newspapers is exempted from service tax.

  33. sandeepkathayat says:

    Service tax payable on immdiator agent not on transporter because it only imposed by govt to trace the agent

  34. Pramod Kumar says:

    Please explain about transport Registration, and how to Transport Registration.

  35. Raju Ozarkar says:

    In your all 3 cases ABC co is transporter. ABC co is sending material from one place to another hence they have to generate LR , hence they will be GTA.

  36. CA Girish Gupta says:

    GTA is one who ultimately issue consignment note.

    • Govind says:

      If the material Vendor (Company) issue separate invoice for transportation charges received from other transporter and charge service tax and same is written on invoice @4.5% shall we take the input for the same?

      And what will be the service charge to vendor by actual transportation vendor,

      Please comment.

  37. Sachin Dagde says:

    Dear Sir,

    I have quarry regarding Goods Transport Agency (GTA)

    ABC company is arranging trucks from transporter and provide to XYZ co. ltd for transport of XYZ co’s goods.

    1) Whether ABC co is GTA?
    2) ABC co giving invoice to XYZ co (Freight cost of transporter+ ABC co marging) in this case whether ABC ac. is GTA?
    3) ABC co giving invoice to XYZ co for Freight cost of transporter (reimbursement) in this case whether ABC ac. is GTA?

    Hope u will reply above quarry

    Thanking you,

    Sachin Dagde

    • K T Beema Sankarish says:

      Answer 1

      ABC Company is GTA because Consignment note is issued by ABC Company. Explaination :-

      As per Section 65B(26) of the Finance Act, 1994; “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”. Therefore, issue of Consignment Note (C/N) is integral and mandatory requirement before any road transport can be said to be GTA.

      The use of the phrase ‘in relation to’ has extended the scope of the definition of GTA. It includes not only the actual transportation of goods, but any intermediate/ancillary service provided in relation to such transportation, like loading/unloading, packing/unpacking, transshipment, temporary warehousing, etc. If these services are not provided as independent activities but are the means for successful provision of GTA Service, then they are also covered under GTA and abatement allowed.

      In the positive list approach, by statutory provision, GTA service was taxable if provided in a ‘goods carriage’ as defined therein. There is no such explicit condition in the negative list approach.
      – See more at: https://taxguru.in/service-tax/service-tax-goods-transport-agency-gta-guide.html#sthash.CjsxfCjn.dpuf

      Answer 2 & 3

      ABC Company is GTA. Reason same as Answer 1.

      Explaination :-

      As per Service Tax Rules, 1994, the person who pays or is liable to pay freight, either himself or through his agent, for the transport of goods by road in a goods carriage, has been made liable to pay service tax. But, if the person liable to pay freight is located in non-taxable territory, then the person liable to pay service tax shall be the service provider – See more at: https://taxguru.in/service-tax/service-tax-reverse-charge-mechanism-goods-transport-agency-gta.html?replytocom=1857666#respond

      Service tax will be payable by XYZ Company. Because Frieght is paid by XYZ Company.

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