Transportation plays a vital role in the Indian economy as the arise of any snag in the transportation channel may lead to disruption of the entire supply chain. In India, most of the Goods are transported via Roadways. in this article, we will discuss the concept of the Goods Transport Agency (GTA) and provisions of GST applicable to GTA.
Who is the Goods Transport Agency (GTA)?
As per the notification number 12/2017- Central Tax (Rate) dated 28 June 2017, Goods Transport Agency means any person
- providing service in relation to Goods Transportation by road and
- Issues Consignment Note by whatever name called.
From the above, it can be observed that the issuance of the consignment notes is the essential condition for a supplier to be qualified as a Goods Transport Agency. If the transporter doesn’t issue such a consignment note/document by whatever name called, the transporter will not come within the ambit of GTA.
What is Consignment Note?
Consignment Note is a document issued indicating that the lien (a right to keep the possession of the property of another person) on goods has been transferred to the transporter and the transporter is held responsible till its safe delivery to the consignee (buyer/receiver). A consignment note is a serially numbered document and contains the following details:
- Consignor Name
- Consignee Name
- Registration no of Goods carriage in which goods are transported
- Place of Origin and Destination details.
- Details of Goods
- GSTIN of the person required to pay tax
- Other details as required under the tax invoice.
Scope of GTA or Services Provided by GTA
The words ‘in relation to’ in the definition of GTA signifies not only the actual transportation of goods but also it extends to various intermediary and ancillary services such as
- Loading/unloading
- Packing/unpacking
- Transshipment
- Temporary warehousing services provided in the course of transportation.
Charge of Tax
As per Entry 18 of Notification no. 12/2017 dated 28th June 2017, services by way of Transportation of goods are exempt except the following:
- By Road except for the services of a
- Goods Transportation Services (GTA)
- Courier Agency
- By Inland Waterways.
From the above, it is clear that the services by way of transportation of goods by road by GTA are taxable under GST unless or otherwise it is specifically exempted.
What are the services specifically exempted for GTA?
Following services provided by GTA are exempted
1. Services by way of Transportation of Goods
- Agriculture Produce
- Goods for which consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed Rs.1,500/-
- Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs.750/-
- Food grain including flour, pulses and rice and milk and salt
- organic manure
- Newspaper or magazines which registered with the Registrar of Newspapers
- Relief materials intended for victims of man-made or natural disasters, calamities, mishap or accidents or
- Defense or military equipment.
2. Services by way of giving on hire
- Services of giving hire to a GTA, a means of Transportation of Goods.
Registration Requirements of GTA Under GST
As per Section 22(1) of the GST act, every person is liable to be registered under the GST Act, if his aggregate turnover in a financial year exceeds the prescribed threshold limit. The threshold limit shall be Rs.40 lakhs in case of Supplier dealing with exclusive supply of goods, and the threshold limit shall be Rs.20 lakhs in any other cases.
However, as per Notification no. 5/2017 dated 19.06.2017 in case of Goods Transport Agency (GTA) engaged exclusively in the supply of GTA services which are liable to GST under Reverse Charge mechanism are exempted from obtaining Registration Under GST.
Therefore, A Goods Transport Agency (GTA) engaged exclusively in the supply of services for which tax shall be paid on reverse charge (by the recipient) is exempted from obtaining registration.
Persons liable to pay GST under Reverse Charge
As per the notification no: 13/2017 dated 28.06.2017, the Recipient of service shall be liable to pay GST if GTA has not paid tax at the rate of 12% (CGST 6% + SGST 6%) for providing services in respect of transportation of goods by road to following persons:
- Factory registered under the Factories Act, 1948
- Societies that are registered under the Societies Registration Act, 1860 or under any law.
- Any cooperative society established under any law
- Persons registered under the CGST Act, SGST Act, IGST Act or UTGST Act
- A body corporate established under any law
- Partnership firm whether registered or not
- Casual Taxable Person
Applicable Rate of GST on GTA
GTA Services are Taxable at the following Rates
- 5% (2.5% CGST + 2.5% SGST)- In this case, Input Tax Credit (ITC) shall not be available to GTA on goods and services used in supplying GTA service.
- 12% (6% CGST + 6% SGST)- No restriction on availing ITC on goods and services used in supplying GTA services by GTA.
Tax Invoice for GTA
Following Information’s are required to be disclosed mandatorily in the Tax Invoice issued by a GTA supplying services in relation to transportation of goods in a goods carriage:
- Name of the Consignor
- Name of the Consignee
- Registration number of Goods carriages in which goods are transported
- Goods transported details
- The gross weight of the consignment
- Details of place of Origin
- Details of place of destination
- GSTIN of the person required to pay GST (GSTIN of the consignor or consignee or GTA as the case may be)
- Any other details as required for a tax invoice under Rule 46.
Place of Supply in case of GTA:
The place of supply of services by way of transportation of goods, including by mail or by courier to-
- Registered Person, shall be the location of such person.
- a person other than a registered person shall be the location at which such goods are handed over for their transportation i.e. the point of origin.