Easy Guide to GTA (Goods Transport Agency) Under GST Act

Goods Transport Agency (GTA): The transportation services of goods by road under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.18), are free from GST Services (Heading 9965):

(a) By road except for the services of:

• A goods transportation agency
• A courier agency

(b) By internal waterways.

Latest Update

• 54th GST Council Meeting – “To clarify that when ancillary/intermediate services are provided by GTA in the course of transportation of goods by road and GTA also issues consignment notes, the service will constitute a composite supply and all such ancillary/intermediate services like loading/unloading, packing/unpacking, transhipment, temporary warehousing etc. will be treated as part of the composite supply. If such services are not provided in the course of transportation of goods and invoiced separately, then these services will not be treated as a composite supply of transport of goods.”
• The GSTN has introduced the much-awaited feature to file Annexure-V online on the GST Portal. This option is specifically designed for newly registered Goods Transport Agencies (GTAs) opting for Forward Charge. View more

• CBIC has notified the Goods Transport Authorities (GTAs) that they are exempt from yearly GST declarations under forward charge on the recommendation of the 50th GST Council meeting. Read more

• An advisory on the submission of the declaration in Annexure V by the Goods Transport Agency (GTA) opting to pay tax under the forward charge mechanism. View more

• Tax payment advisory for (GTA) Goods Transport Agencies under the forward charge mechanism is now available at the government’s official portal. View more

• GST rates for Good Transport Agencies (GTA) have been amended by the CBIC department w.e.f. 18th July 2022. read more

Thus, it is to be considered as the transportation of goods by road, unless it is showcased as a service under a GTA (goods transportation agency), it will not attract GST.

Under GST laws, the Goods Transport Agency (GTA) is defined in clause (ze) of notification no.12/2017-Central Tax (Rate) dated 28.06.2017. (ze) ‘goods transport agency’ is explained as a person who bestows service about the transport of goods by road and produces consignment notes, by whatever name called;

Thus, the issuance of a consignment note is considered essential for a supplier of service to be recognized as a GTA. In case, the service provider did not issue such a consignment note, the transporter will not fall under the guidelines of the goods transport agency. Further, the absence of a consignment note for any goods hints the transporter has possession of the goods and is responsible until the goods are safely delivered to the consignee.

What is a Consignment Note?

There is no mention of consignment note neither in the Act nor in the notification no. 12/2017-Central Tax (Rate). For information, one can go through the meaning of the consignment note ascribed to the term under the Explanation to Rule 4B of Service Tax Rules, 1994. it defines a consignment note as a document provided by a goods transport agency against the receipt of goods for the transport of goods by roadways in a goods carriage.

The document contains details like serial number, name of the consigner and consignee, registration number of the carriage of the goods in which the goods are transported, details of goods being transported, details of the place of origin and destination, and the person who will be liable for the service tax payable from the consignor, consignee or the goods transport agency.

GST Rates on Services Offered by GTA

Following notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 as modified by notification no. 20/2017- Central tax (Rate) dated 22.08.2017, sr.no. 9 and sr. no. 11, (i) Services of goods transport agency (GTA) in accordance to the transportation of goods (comprising household goods utilized for personal use) (Heading 9965 &9967 respectively) employs GST @2.5% or 6% CGST.

Also, similar rates are exerted for SGST, which turns the effective GST tax rates to 5% or 12%. However, a condition implies for the rate of 5% which bounds the taxpayers that he can not claim input tax credit levied on goods or services used in supplying the service.

Further notification explains that (a) credit of input tax levied on goods or services utilized exclusively in the procurement of such service has not been accepted; and (b) credit of input tax credit levied on goods or services consumed partly for procurement of such service and partly for other impacted supplies eligible for input tax credits, its reversal proves such supply of service as an exempt supply and attract the rules under provisions of subsection (2) of section 17 of the Central Goods and Service Tax Act, 2017.

If the goods transport agency chooses to pay central tax at 6% the applied cumulative GST will be 12% in this criteria and the paid central tax for all the services supplied by GTA will be 6%. furthermore, the GTA would be able to claim ITC, if this option is being provided.

Thereby, in case the GTA is not liable to take advantage of ITC for the supplies belonging to it and the accountability under GST is emitted under reverse charge basis, the receiver of GTA service releasing the tax liability is permitted to take Input Tax Credit (ITC) of the amount of tax paid under reverse charge, issued it is utilized in the course or development of business at his end.

However, on a forwarding charge basis, the receiver would further be able to take advantage of the ITC of the GST paid by GTA. Notification no. 11/2017-Central Tax (Rate), sr.no.11, (ii) also assigns that associated services in transport other than those reported in (i) (Heading 9967) would charge GST @9% CGST. The SGST would also attract identical rates, which would result in the effective rate applicable at 18%. Similar rates are also applicable for services falling under heading 9965 in terms of notification no. 11/2017-Central Tax (Rate), sr.no. 9 (v).

Who is Liable to Pay GST on GTA Services (5% Rate – No ITC – RCM-7 Recipients)

The responsibility of paying GST for the supply of services by a goods transport agency (GTA )is transferred to the recipients who have not levied central tax at the rate of 6%, regarding transportation of goods by road (in terms of notification no. 13/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.1) as corrected by notification no. 22/2017-Central Tax (Rate) dated 22.08.2017, if the receivers (placed in the taxable territory) fall in the following category:

• Any factory listed under or regulated by the Factories Act, 1948(63 of 1948); or
• any society indexed under the Societies Registration Act, 1860 (21 of 1860) or under any other rule applicable for few times in any part of India; or
• any cooperative society settled by or under any rule; or
• if any person has registration under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
• any body corporate settled, by or under any law; or
• any companionship if registered or not under any law comprising an association of persons; or
• any random taxable person.

Thus if any of the above-mentioned categories of persons avail the services of GTA in the taxable territory the GTA supplier can pay GST (and avail ITC) @ 12% (6% CGST = 6% SGST): if the GTA does not opt for paying tax (and avail ITC), the receivers will be eligible to pay GST. If the recipients do not fall in the above-mentioned categories, the responsibility of paying GST will be of the supplier of GTA services.

GTA Services Exempted from GST

Notification no.12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.21), exempts below-given services by a GTA (Heading 9965 or 9967) from payment of tax: Services provided by a GTA, via transport in a goods carriage:

(a) Agricultural Yield

(b) Goods which are being transported in a single carriage and consideration charged for transportation of goods on it does not go above one thousand five hundred rupees:

(c) Goods, which are being transported to a single consignee and consideration charged for transportation of all such goods does not go above seven hundred and fifty rupees.

(d) Salt, Milk, Food Grains like Rice, Flour, and Pulses

(e) Organic Manure

(f) Registered newspapers or magazines with the Registrar of Newspapers;

(g) If any relief material is being transported for the victims of natural or man-made disasters, calamities, accidents or mishaps

(h) Defence or military equipment

Notification no.12/2017– Central Tax (Rate) dated 28.06.2017 (sr.no.22) which exempts GTA for the services given below:

• Services are provided on a hiring basis
• A mode of transportation of goods for a goods transport agency

i.e., in case of hiring of a means of transportation from the GTA, no GST will apply to such transactions.

Importance of ‘in Relation to’ Term in the Definition of GTA

The term ‘in relation to’ in the definition of the GTA extends the scope from the actual transportation of goods to any other service provided like packing/unpacking, loading/unloading, temporary warehousing, trans-shipment, etc. If these services are not offered independently and are provided as the successful provision of GTA Service, they will fall under GTA.

Conclusion: The overall discussion clarifies that not all the transport of goods by road is by GTA. The services are from GTA only when the GTA issues a consignment note mandatorily. The services provided by GTA will fall under the GST otherwise if a person provides the services of transportation are exempted from the GST.

Furthermore, if the persons from specified categories supply the service of GTA in the taxable territory, the receivers who get such services become liable to pay GST instead of the supplier of services but the GTA remains liable for collecting and payment of tax @ 12% (6% CGST + 6% SGST).

In other situations, where GTA service is utilized by persons other than those mentioned, the GTA service supplier will be liable to pay the GST. Also, he won’t be able to take ITC benefits on input services utilized by him if tax is levied at 5% (2.5% CGST + 2.5% SGST). If the GTA service provider rents any means of transport to offer his output service, no GST will be charged on such inputs.

Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.21A)-clarifies GTA services as exempted to unregistered persons.

Crux

• There is no need for registration if the GTA is offering services at 5% without ITC benefit, which means endowing exclusively RCM supplies.
• There is a need for registration if surpasses the 20L limit (40L is for retailers of goods nor for services)
• there is the provision of exemption if GTA transporting specific goods or if supplying services to an unregistered person.
• The Recipient from 7 specified categories will only be availed with the RCM facility with condition GTA providing supply @5%.