The transportation sector is the most important sector of our country, which makes it similarly important for the sector to come under the purview of Goods and Services Tax. Goods Transport Agency generally is known as GTA, is one between the most unorganized sectors in India. The charge of tax on Goods Transport Agency has always been a controversial matter.
Exemption: Government has provided the exemption for the services by way of transportation of goods by road by Notification 12/2017CT(R). But the following services are not exempt —
- Goods Transport Agency (GTA)
- A Courier Agency
Before we start discussing further on this topic, we need to know the word Goods Transport Agency, it is defined under Notification 11/2017 CT (R) as any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
Therefore, Consignment Note will play a very important role under the ambit of GTA.
Applicability of Reverse Charge Mechanism:
Services by Goods Transport Agency to recipients stated under notification 13/2017 CT (R) are covered under Reverse Charge Mechanism (RCM).
The persons specified under the said notification are:
- Any factory registered under or governed by the Factories Act, 1948
- Any society registered under the Societies Registration Act, 1860 or under any other law for the time being in force in any part of India
- Any co-operative society established by or under any law
- Any person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act
- Any Body corporate established, by or under any law
- Any partnership firm whether registered or not under any law including association of persons
- Any casual taxable person (CTP), having a place of business in the taxable territory
RCM is applicable to major Goods Transport Agency services to minimise the compliance procedures for GTAs.
Though, GTAs are liable to pay tax in cases where no tax is paid under RCM.
For example – Transport of goods for an individual for domestic use.
GTA services are subject to different tax rates in different situations:
- Where GTA services are procured by persons specified in Notification 13/2017 CT(R). Such specified persons are liable to pay tax @ 18%, ITC of the said services can be availed to the extent such services are used for business purpose.
- Where GTAs are offering services to the person other than those specified above, a GTA can either charge:
(i) @ 5% (2.5% CGST+2.5% SGST/UTGST or 5% IGST) provided GTA has not taken the Input Tax Credit (ITC) on goods and services used in supplying GTA service or
(ii) @ 12% (6% CGST+6% SGST/UTGST or 12% IGST) provided GTA pays GST under forward charge. There is no restriction on availing ITC on goods and services used in supplying GTA service by GTA.
Exemption to specified goods: GTA services are exempt when such are used for transportation of goods specified under Notification 12/2017 CT(R). Services provided by a goods transport agency, by way of transport in a goods carriage following services are exempt:
(a) Agricultural produce;
(b) Goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
(c) Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
(d) Milk, salt and food grain including flour, pulses and rice;
(e) Organic manure;
Other aspects on GTA:
Whether RCM is applicable on payments made for the hiring of transport from unregistered GST traders?
RCM under section 9(3) is applicable for GTA and not for the transport of goods. Where the vehicle is taken on rent or lease, it will be the supply of service and supply of service will be taxable under RCM under section 9(4).
Tax Invoice [Rule 54(3) of CGST Act, 2017]: Any document containing the following particulars:
- Gross weight of the consignment,
- Name of the consigner and the consignee,
- Registration number of goods carriage in which the goods are transported,
- Details of goods transported,
- Details of the place of origin and destination,
- Goods and Services Tax Identification Number of the person liable for paying tax whether as
- Consigner, consignee or goods transport agency, and
- Containing other information as mentioned under rule 46.
The law has been carefully drafted to exclude the unorganised sector in good transport from the levy of GST. In respect of those who provide agency services in transport, the liability is on the recipients in most of the cases or unless the option to pay under the forward charge.
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice. Neither the authors accept any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.