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The Finance Act, 1997 had levied Service Tax on Goods Transporter in 1997 which was subsequently withdrawn after nation-wide strike.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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55 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?

    • Sushil Choudhary says:

      The person paying for GTA services will be the recipient of GTA services and the Location of the recipient will be the place of supply. Accordingly IGST will be applicable if goods are transported to UP and the UP party is paying for freight.

      If the recipient party is unregistered then GTA will collect 5% GST and the place of supply will be the location of the goods.

  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 ?

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