9/20/2017 Goods Transport Agency under GST

Goods Transport Agency under GST

Updated on Sep 15, 2017 - 02:16:19 PM

Transportation is a vital part of economy as any problem in transportation disrupts the entire business
channel. This is why, any petrol price change has a far-reaching effect in disruption of business.

We have already covered transport by rail & air.

In this article, we will discuss the goods transportation and GTA (goods transport agencies) and the
provisions of GST applicable on them.

Topics:

Goods transportation in India

What service of transportation of goods is exempt under GST?
What is a GTA?
What is a consignment note?
What are the services provided by a GTA?
What was the situation under Service Tax?
What is the rate of GST on GTA?
Is a GTA liable to register?
Scenarios for Registration for A Goods Transport Agency
Who pays GST while hiring a GTA?
Which businesses are liable to pay GST under reverse charge for a GTA?
Who will pay under Reverse Charge?
Various Scenarios to Determine Who is liable to pay GST in case of a GTA
Reverse Charge if the GTA Is Unregistered
Input Tax Credit
Various Scenarios to Determine Eligibility of ITC
Invoicing for GTA
Payment of Tax by a GTA
Returns to be Filed by a GTA
How to determine Place of Supply for a GTA
FAQs on GTA
Conclusion

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9/20/2017 Goods Transport Agency under GST

Goods Transportation in India

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 are done by transporter or courier agency. This article will discuss the
transporter, i.e, the GTA.

What service of transportation of goods is exempt

under GST?
Services by way of transportation of goods are exempted:

(a) by road except the services of:

(i) a goods transportation agency;

(ii) a courier agency

(b) by inland waterways.

Therefore, the service of transportation of goods by road continue to be exempt even under the GST
regime. GST is applicable only on goods transport agency, GTA.

What is a GTA?
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency”
or 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. Thus, a consignment note is an essential condition to be
considered as a GTA.

What is a consignment note?

A consignment note is a document issued by a goods transportation agency against the receipt of
goods for the purpose of transporting the goods by road in a goods carriage.

If a consignment note is not issued by the transporter, the service provider will not come within the
ambit of goods transport agency.

If a consignment note is issued, it means that the lien on the goods has been
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transferred to the transporter. Now the transporter is responsible for the goods till its safe delivery to
the consignee.

A consignment note is serially numbered and contains –

Name of consignor
Name of consignee
Registration number of the goods carriage in which the goods are transported
Details of the goods
Place of origin
Place of destination.
Person liable to pay GST – consignor, consignee, or the GTA.

What are the services provided by a GTA?

The service includes not only the actual transportation of goods, but other intermediate/ancillary
service provided such as-

Loading/unloading
Packing/ unpacking
Trans-shipment
Temporary warehousing etc.
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If these services are included and not provided as independent activities, then they are also covered
under GTA.

What was the situation under Service Tax?

RCM applied under Service tax. There was an abatement of 60% (40% taxable) for transportation of
used household goods and 70% (30% taxable) for transportation of normal goods.

What is the rate of GST on GTA?

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*As per Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017

Is a GTA liable to register?

There was a lot of confusions whether a GTA has to register under GST.

As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is engaged in making
only supplies of taxable goods/services on which reverse charge applies is exempted from obtaining

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registration under GST.

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

Scenarios for Registration for a Goods Transport

Agency

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9/20/2017 Goods Transport Agency under GST

Who pays GST while hiring a GTA?

If a GTA provides the services to the certain businesses, recipient of services is required to pay GST
under reverse charge.

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9/20/2017 Goods Transport Agency under GST

Which businesses are liable to pay GST under

reverse charge for a GTA?
The following businesses (recipient of services) is required to pay GST under reverse charge:-

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 GST registered person
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 will pay under Reverse Charge?

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,

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then he will pay GST on reverse charge basis.

Various Scenarios to Determine Who is Liable to

pay GST in case of a GTA

**** If GTA is registered

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9/20/2017 Goods Transport Agency under GST

Reverse Charge if the GTA Is Unregistered

As per Notification No.8/2017-Central Tax (Rate) dated 28th June 2017, intra-state supplies of goods
or services or both received by a registered person from any unregistered supplier, is exempted from
GST if it does not exceed Rs. 5,000 in a day.

If the transport charges (from an unregistered GTA) are less than Rs. 5,000 per day then no
GST will be payable.

Input Tax Credit

If GTA pays GST
GTA has 2 options-

12% GST with ITC *

OR

5% GST with no ITC*

However, the GTA has to opt at the beginning of financial year.

*As per Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017

If Service Receiver pays GST under RCM

Service receiver can always avail ITC on GST paid under RCM.

Various Scenarios to Determine Eligibility of ITC

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