The most popular form of goods transport in India is via road. Transportation of goods by road are done by a transporter or courier agency. In this article, I have covered all the provisions affecting GST on Goods Transport Agency. Let’s discuss step by step- GST on Goods transportation.
What is Goods Transport Agency (GTA) as per GST Laws?
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017,GTA refers to goods transport agency, which means-
(i) Any person who provides service in relation to transport of goods by road and
(ii) Issues consignment note, by whatever name called.
What is Consignment Note ?
Consignment note refers to a document, issued by a goods transport agency for the purpose of transport of goods by road 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 the goods transported,
- Details of the place of origin and destination,
- Person liable for paying GST
Issuance of a consignment note is the main determinant for a transporter to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GST on Goods Transport Agency.
GST on Goods Transport Agency: Is GTA is required to be registered under GST?
As per section 23(1) of the CGST Act, a person need not be registered if-
(i) The Person is engaged exclusively in non-taxable supply or
(ii) Exempted supply
List of Exemption for GST on Goods transport agency:
Entry No. 18: Transportation of Goods by Road is Exempt except in Case of GTA or Courier Services
Entry No. 21: If Transportation of Specified Goods Provided by Goods transport agency (GTA)
List of Specified Goods:
- Relief Materials,
- Single consignee value does not exceed INR 750
- Single carriage value does not exceed INR 1500
- Defense or military equipment,
- Newspaper or magazines,
- Railway equipment or materials,
- Agricultural produce,
- Milk, Salt and Foodgrains including flours, pulses, and rice
- Organic Manure.
Entry No. 21(a): If GTA Provide services to any Unregistered person or Unregistered Casual Taxable Person Except covered under RCM is Exempt from GST.
Entry No. 21(b): IF GTA Provides services to any
- A Department or Establishment of CG/SG/UT
- Local Authority
- Government Agency taking registration only for the purpose of sec 51
Exempt from GST.
Entry No. 22: Services by way of giving on hire to GTA, a means of transportation of goods. Thus, if the GTA hires a means of transportation of goods, It is exempted from GST.
GST on GTA: What are the rates of GST for Goods Transport Agency (GTA)?
There are two rates of GST on Goods Transport Agency (GTA). Goods transport agency has option to charge GST at the rate of 5% or 12%. The GST rates are depends on ITC availability.
- GST Rate 5% for GTA – Provided that credit of input tax charged on goods and services used in supplying services are not taken by GTA.
- GST Rate 12% for GTA – Provided that the Opting to pay tax @ 12% shall henceforth be liable to pay 12% GST on Goods transport agency under forward charge mechanism.
HSN code for Goods Transport Agency (GTA)
Heading 9965 – Services of Goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use)
6 Digits HSN Code for Goods transport agency:
Reverse charge mechanism (RCM) on Goods Transport Service (GTA)
Section 2(98) of CGST Act, 2017 deals with reverse charge. it contain definition of reverse charge and the same is reproduced herein below for the sake of convenience:
“reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub¬section (4) of section 5 of the Integrated Goods and Services Tax Act.
On Goods Transport Agency (GTA) RCM under section 9(3) of CGST Act is applicable and it mandates the recipient of services to discharge the GST liability.
RCM for GTA services:
Supply of Services by a goods transport agency (GTA) who has not paid tax at the rate of 6%, in respect of transportation of goods by road to-
|Sr No||Service recipient|
|1||any factory registered under or governed by the Factories Act, 1948|
|2||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|
|3||any co- operative society established by or under any law|
|4||Any Registered person under GST|
|5||any body corporate established, by or under any law|
|6||any partnership firm whether registered or not under any law including association of persons|
|7||any casual taxable person|
Recipient of service under GST: The person who pays or is liable to pay the 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 i.e., service recipient.
What is place of supply for GTA services?
When location of supplier of services & the location of recipient is based in India:
- If services provided to a registered person, the place of supply will be location of such person.
- If services provided to a person other than a registered person, place of supply will be location at which such goods are handed over for their transportation.
Where the location of supplier of services or the location of recipient of services is outside India, place of supply of services of transportation of goods by GTA shall be the place of destination of such goods.
What are records and accounts to be maintained by GTA?
Every transporter shall maintain records of the cosigner, consignee and other relevant details of the goods in prescribed manner. Person engaged in the business of transporting goods shall maintain records of goods transported, delivered and goods stored in transit by him along with the GSTIN of the registered cosigner and consignee for each of his branches.