Transportation is a huge part of the economy. Any problem in transportation disrupts the entire business channel. The most popular form of goods transport in India is via road. As per the National Highways Authority of India, about 65% of freight and 80% passenger traffic is carried by the roads.

Transportation of goods by road is done by transporter or courier agency. We will discuss GTA or goods transport agencies and the provisions of GST applicable on them.

Goods Transport Agency (GTA)

As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.”

This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA.

Consignment Note

As per Explanation to Rule 4B, Service Tax Rules, 1994, a consignment note is a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage.

The consignment note  is serially numbered, and contains the names of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods, place of origin and destination, and person liable for paying service tax whether consignor, consignee or the GTA .

Individual truck owners who do not book cargo and issue consignment note in normal course of business are, not GTA and accordingly, services provided by them are not liable to service tax.

Rates

Service by a GTA

GST rate

Carrying-

Agricultural Produce

Milk, salt and food grain including flour, pulses and rice

Organic Manure

Newspaper or magazines registered with the Registrar of Newspapers

Relief materials meant for victims of natural or man-made disasters

Defence or military equipments.

0%

Carrying-

Goods, where consideration charged for the transportation of goods on a consignment  transported in a single carriage is less than Rs. 1500

0%

Carrying-

Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750

0%

Any other goods

5% NO ITC

Used household goods for personal use

5% NO ITC

Transporting goods

18% with ITC

Hiring out vehicle to a GTA

0%

 Is a GTA liable to register?

As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is only engaged in making supplies of taxable goods/services, where the total tax on which is liable to be paid on reverse charge basis by the recipient as the category of persons exempted from obtaining registration under GST.

Thus, a GTA does not have to register under GST if he is exclusively transporting goods even if the turnover exceeds 20 lakhs as the total tax is required to be paid by the recipient under reverse charge basis.

Reverse Charge in case of GTA

Normally a service provider is required to pay taxes, but in case a GTA provides the services to the following persons, recipient of services is required to pay GST under reverse charge (notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) :-

  1. Factory registered under the Factories Act,1948
  2. A society registered under the Societies Registration Act, 1860 or under any other law
  3. A co-operative society established under any law
  4. A person registered under GST
  5. A body corporate established by or under any law; or
  6. A partnership firm whether registered or not (including AOP)
  7. Casual taxable person

Who is liable to pay under Reverse Charge Basis?

As per Notification No. 13/2017- Central Tax dated 28/06/2017 the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the receiver of service.

Payment is by Sender

If the supplier of goods (consignor) pays the GTA, then the sender will be treated as the recipient. If he belongs to the category of persons above then he will pay GST on reverse charge basis.

Payment by Receiver

If the liability of freight payment lies with the receiver (Consignee), then the receiver of goods will be treated as a receiver of transportation services. If he belongs to any of the above category of persons, then he will pay GST on reverse charge basis.

Input Tax Credit

GTA can opt for 12% GST with ITC or 5% GST with no ITC. However, the GTA has to give an option at the beginning of financial year.

Place of Supply

The place of supply of services by way of transportation of goods, including by mail or courier to-

  • A 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.

 Invoicing for GTA

  1. Name of the consignor and the consignee
  2. Registration number of goods carriage in which the goods are transported
  3. Details of goods transported
  4. Gross weight of the consignment
  5. Details of place of origin and destination
  6. GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency
  7. Name, address and GSTIN (if applicable) of the GTA
  8. Tax invoice number (it must be generated consecutively and each tax invoice will have a unique number for that financial year)
  9. Date of issue
  10. Description of service
  11. Taxable value of supply
  12. Applicable rate of GST (Rates of CGST, SGST, IGST, UTGST and cess clearly mentioned)
  13. Amount of tax (With breakup of amounts of CGST, SGST, IGST, UTGST and cess)
  14. Whether GST is payable on reverse charge basis
  15. Signature of the supplier

Payment of Tax by a GTA

A GTA cannot enjoy any ITC on any of the inputs. So, payment of tax will be only through cash in the normal modes of card/netbanking/cash (only for taxes upto Rs.10,000).

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