Goods Transport Agency under GST

Hello. In this post, we will be discussing about Goods Transport Agency under GST. We will be discussing the following topics:

  1. What is GTA?
  2. What is a consignment note?
  3. Exemption under GST for GTA
  4. Rate of GST for GTA
  5. Persons liable to pay GST on GTA services
  6. Registration requirement for GTA service providers
  7. Returns to be filed by GTA

Note: For ease of reference, in this post, we refer to goods transport agency as GTA.

As we all know, transportation of goods by road, rail or air plays a very vital role in the functioning of the business. Any major disruption in the same is likely to hamper the entire supply channel. The legal position prevailing under Service tax had provided certain exemptions in case of a goods transport agency. This is also brought under the GST regime.

What is GTA?

Before getting deeper into the various provisions, we first need to under what Goods Transport Agency exactly is. The definition of GTA is provided under clause (ze) of notification no. 12/2017-Central tax (Rate) as:

“Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.”

Thus, from the above definition it becomes quite clear that for a supplier of service to be a Goods Transport Agency, the issuance of a consignment note is mandatory. If such a consignment note is not issued by the transporter, he will not come within the ambit of goods transport agency.

Now the question arises as to what is a consignment note?

Consignment note

There is no definition of what a consignment note is anywhere in the Act.  In simple terms, a consignment note is a document which is issued by a goods transport agency against the receipt of goods for the purpose of transport by road in a goods carriage. It contains the name of the consignor and consignee, the registration number of the goods carriage in which goods are transported etc.

Exemption under GST for GTA

Services by way of transportation of goods

  1. By road except for the services of
    • a goods transport agency
    • a courier agency
  2. By inland waterways

Thus transportation of goods by road, if it is a service rendered by goods transport agency is taxable under GST. There are various services which are provided by GTA such as packing, loading, unloading etc.

Rate of GST for GTA

Sl. No Services by GTA Rate
1 Carrying:

  • Agricultural Produce
  • Milk, salt, and food grains including flour, pulses, and rice
  • Organic manure
  • Newspaper and magazines registered with the registrar of newspapers
  • Relief material meant for victims of natural or man-made disasters
  • Defence or military equipment
0%
2 To an unregistered person, including an unregistered casual taxable person 0%
3 Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use) 5% with no ITC

OR

12% with ITC

4 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 0%
5 Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty 0%
6 By way of giving on hire to a goods transport agency, a means of transportation of goods 0%

Persons liable to pay GST on GTA services

The liability to pay GST lies on the recipient for the supply of goods by GTA who has not paid central tax @6%, in respect of transportation of goods by road if the recipients (located in the taxable territory) belong to any of the following categories:

  1. Factory registered under the Factories Act 1948
  2. Society registered under the Societies Registration Act, 1860
  3. The co-operative society established by or under any law
  4. The person registered under the CGST, SGST, IGST or UGST Act
  5. Any corporate body established by or under any law
  6. Partnership firm whether registered or not under any law including association of persons
  7. Casual taxable person

Thus in above cases, where services of GTA are availed by the above categories of persons in the taxable territory the GTA supplier has the option to pay tax (and avail ITC ) @12% (6% CGST+6% SGST). If the GTA does not avail this option, the recipient has to pay the tax.

Registration requirement for GTA service providers

Government has eased the requirement for registration for GTA service providers via notification no. 5/2017-Central tax. It has provided that a person who is engaged in making only supplies of taxable goods/services on which tax is required to be paid under reverse charge are exempted from obtaining registration.

Returns to be filed by GTA

We will analyze this a bit carefully. In the above discussion, we have clearly seen that it is not mandatory for GTAs to have a registration. In case they are providing services on which tax is applicable then, payment is on the reverse charge basis. But if a GTA registers then in that case return filing becomes mandatory. Filing of normal returns relating to outward supplies, inward supplies and summary return (GSTR 1, GSTR 2, GSTR 3) on or before the respective dates is mandatory. If the GTA fails to file the return,  then, they will have to pay interest and penalty.

Conclusion:
In a nutshell, the GST law continues the provisions prevailing under the Service Tax regime. The law recognises that pure transportation of goods services are mostly provided by persons in the unorganised sector and hence has specifically excluded such operators from the tax net. To reduce the problems of the people in the unorganised sectors, relief is provided in many cases relating to options to pay tax and registration which will eventually prove useful for the taxpayer.

That brings us to the end of this post. Please comment below and let us know what you think and if you have any questions.

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