Goods Transport Agency Under GST
The Indian economy depends heavily on transportation. This is because any problem with the movement of commodities has the potential to interrupt the entire supply chain. The efficient flow of products and services from production to consumption is made possible by the Goods Transport Agency, or GTA, under the GST. Nonetheless, it is critical to comprehend how GTAs affect taxes. This article gives a thorough explanation of how the Goods Transport Agencies (GTAs) are affected by the GST and includes information on exclusions, registration, invoicing, and other topics.
Table of content
Goods Transportation in India
In India, the most common way to carry products is by road. Approximately 80% of passenger traffic and 65% of freight are transported by roads in India, according to the National Highways Authority. A courier service or transporter handles the road transportation of products.
Service of Goods Transportation Exempt under GST
Services provided by means of goods transportation are exempt:
By road, with the exception of:
a courier service;
a commodities transportation agency
By waterways that are inland.
As a result, the service of product transportation by road is still excluded under the GST regime. Only GTA and goods transit agencies are subject to GST.
Goods Transport Agency Under GST
Any person who provides services associated with the road transportation of goods and issues consignment notes. It is regardless of their name, is considered a "goods transport agency," or GTA, as defined by Central Tax (Rate) Notification No. 11/2017, which was published on June 28, 2017. This implies that only individuals who issue a consignment note are regarded as GTAs, even though others may also rent cars for the delivery of goods. Therefore, in order to be considered as a GTA, a consignment note is a crucial necessity.
What is Consignment Note?
A consignment note is a document that a goods transportation agency issues after receiving commodities for use in a goods carriage when they are transported by road. The service provider will not fall under the purview of the products transport agency if the transporter fails to issue a consignment note.
A consignment letter indicates that the transporter now holds the lien on the items. The products are now under the transporter's care until they are delivered to the consignee safely.
A consignment note has a serial number and includes the following information:
The consignor's name
The consignee's name
The goods carriage's registration number, which is used to transport the products
Product details
Origin location
The final destination.
The GTA, the consignor, or the consignee is responsible for paying GST.
Services Provided by a GTA
Along with the actual transportation of products, the service also covers additional supplementary or intermediary services like
Filling up and emptying
Packing and unloading
Shipment transfer
Temporary storage, etc.
These services are also covered by the GTA if they are part of the package and not offered separately.
GST Rate on GTA
The following table shows the GST rates applicable to goods transport agencies:
Service by a GTA | GST rate |
Carrying-agricultural produce, salt and food grain including flour, pulses and rice, milk, organic manure, defence or military equipment, newspaper or magazines registered with the Registrar of Newspapers, relief materials for victims of natural or man-made disasters | 0% |
Carrying- goods, where consideration charged for transportation on a consignment transported in a single carriage is below Rs. 1,500 | 0% |
Carrying- goods, where consideration charged for transportation of all goods for a single consignee is below Rs. 750 | 0% |
Any other goods | 5% No ITC /12% with ITC |
Used household goods meant for personal use | 0% |
Transporting goods of unregistered persons | Earlier exempted, but made taxable later, but list yet to be notified currently |
Transporting goods of unregistered casual taxable persons | Earlier exempted, but made taxable later, but list yet to be notified currently |
Transporting goods (GST paid by GTA) | 5% No ITC/12% with ITC |
Transporting goods of 7 specified recipients | Irrespective of GTA choosing 12% (with ITC) and 5% (without ITC), if the GTA opts for paying tax on forward charge by giving a yearly declaration, then it appears in the tax invoice. If declaration is not given, then GTA has opted for the reverse charge where the recipient has to deposit tax and ITC cannot be availed by the GTA. |
Hiring out a vehicle to a GTA | 0% |
Liability of a GTA to Register
The question of whether a GTA is required to register under GST was a source of much uncertainty. According to Notification No. 5/2017-Central Tax, dated 19/06/2017, an individual who solely supplies taxable products or services that are subject to the Reverse Charge Mechanism (RCM) is excluded from registering for GST. Therefore, if a GTA is only transporting products and the recipient is responsible for paying the full tax on a reverse charge basis (even if the turnover exceeds the threshold limit), he is exempt from registering under GST.
When is GTA Required to Register
Service | Turnover | GST Paid By |
Case A | ||
Transporting goods of a registered dealer or any of the businesses mentioned | Rs. 9 lakhs | Registered dealer/ recipient of services under RCM. |
Transporting goods of unregistered dealer | Rs. 3 lakhs | GTA is liable to pay GST |
Total Turnover | Rs. 12 lakhs | Aggregate turnover is less than Rs.20 lakhs threshold. GTA not required to register. |
Case B | ||
Transporting goods of a registered dealer or any of the businesses mentioned | Rs. 19 lakhs | Registered dealer/ recipient of services under RCM. |
Transporting goods of unregistered dealer | Rs. 3 lakhs | GTA is liable to pay GST. |
Total Turnover | Rs.22 lakhs | Aggregate turnover exceeds the Rs.20 lakhs threshold. GTA will have to register as it is supplying to URD. |
Case C | ||
Transporting goods of a registered dealer or any of the businesses mentioned | Rs. 25 lakhs | Registered dealer/ recipient of services under RCM. |
Transporting goods of unregistered dealer | Rs. 0 lakhs | —---- |
Total turnover | Rs. 25 lakhs | Aggregate turnover exceeds the Rs.20 lakhs threshold. GTA still not required to register under GST. |
Businesses Required to Pay GST Under Reverse Charge Mechanism for a GTA
When obtaining services from a GTA, the following companies (recipients of services) must pay GST under the Reverse Charge Mechanism:
Factories listed in accordance with the 1948 Factories Act
Societies that are registered in accordance with any law, including the Societies Registration Act of 1860
Cooperative organisations created in accordance with applicable legislation
Individuals registered for GST
Corporate entities created by or in accordance with any legislation
Partnership businesses, including Associations of Persons, or AOPs, whether or not they are registered
Temporary taxable individuals
Who Pays Under Reverse Charge?
A person who resides in a taxable territory and pays or is responsible for paying freight for the road transportation of goods in goods carriage is considered the recipient of service.
Sender's payment: The consignor will be considered as the service recipient if the consignor, who supplies the goods, pays the Goods Transport Agency (GTA). The consignor will be liable for GST on a reverse charge basis if they fit into one of the designated categories (such as a factory, registered society, GST-registered person, etc.).
Receiver's payment: The consignee will be regarded as the recipient of the transportation services if they are responsible for paying the freight. The consignee will be liable for paying GST under the reverse charge mechanism if they fit into any of the above categories (such as a factory, registered society, GST-registered individual, etc.).
Scenarios to Determine Liability to Pay GST in case of a GTA
Service Provider | Supplier/ Consignor | Receiver of goods/ Consignee | Person paying Freight | Person liable to pay GST |
GTA | A company (Whether or not registered under GST) | Partnership Firm (Whether or not registered under GST) | Company | Company |
GTA | Partnership Firm (Whether or not registered under GST) | Registered Dealer X | X | X |
GTA | Partnership Firm (Whether or not registered under GST) | Registered Dealer X | Firm | Firm |
GTA | A Co-Op Society Ltd (Whether or not registered under GST) | Registered Dealer X | X | X |
GTA | A Co-Op Society Ltd (Whether or not registered under GST) | Registered Dealer X | A Co-Op Society Ltd | A Co-Op Society Ltd |
GTA | Company A Ltd. (Whether or not registered under GST) | Company B Ltd. (Whether or not registered under GST) | B Ltd | B Ltd |
GTA | URD A | Registered Dealer X | A | X |
GTA | URD A | Registered Dealer X | X | X |
GTA | URD A | URD F | F | Exempted** |
Reverse Charge if the GTA Is Unregistered
According to Notification No.32/2017-Central Tax (Rate), which was released on June 28, 2017, intrastate supply of services or both that a registered person purchased from any unregistered provider were exempt from GST as long as they did not exceed Rs. 5,000 per day. However, because the government has withdrawn the notice, RCM only applies to unregistered purchases for a particular list of supplies that have not yet been notified.
Input Tax Credit
If GST is paid by GTA: GTA has the option of paying 5% GST without ITC or 12% GST with ITC. Nonetheless, GST must be paid by the GTA at the start of the fiscal year. If the service recipient pays the GST using RCM: Service recipients are always eligible for the Input Tax Credit (ITC) on GST paid through the Reverse Charge Mechanism (RCM). However, under the reverse charge method, the Goods Transport Agency (GTA) is unable to claim ITC in GST paid.
GTA invoicing: The following information must be included on a Goods Transport Agency (GTA) invoice that complies with GST:
The consignor and consignee's names
Details of the commodities being transported
The consignment's gross weight
The car's registration number that is transporting the items Details about the starting point and final destination
The GSTIN of the person who is required to pay taxes, whether that person is the consignee, the consignor, or the goods transport agency.
Name, address, and GSTIN of the GTA (if applicable)
Tax invoice number (each invoice must have a distinct number for that fiscal year and must be generated consecutively)
Issue date
Service description
The supply's taxable value
The relevant GST rate, in which the CGST, SGST, IGST, UTGST, and cess rates are specifically mentioned.
The total amount of taxes (including the sums of cess, IGST, CGST, SGST, and UTGST)
An indication of whether reverse charge GST is applicable
The supplier's signature
Returns to be Filed by a GTA
A GTA does not need to register if all of its services are covered by RCM. The typical two returns, GSTR-1 (sales) and GSTR-3B (summary & tax liability), must be filed by a GTA either monthly or quarterly. If it registers, it must also file one yearly return in form GSTR-9.
Determining the Place of Supply for a GTA
The location where services are provided by the conveyance of commodities, such as via courier or mail, to—
The address of the person will be that of a registered individual
The location where such goods are given up for transportation must be that of an unregistered individual.
Conclusion
It might be difficult for goods transport agencies to navigate GST. This guide streamlines the procedure by going over important topics like invoicing, registration, reverse charge, and consignment notes. GTAs can guarantee compliance and effective operations by being aware of these.
FAQ
Q1. Who pays GST while hiring a GTA?
The Reverse Charge Mechanism (RCM) imposes the primary burden of paying GST on Goods Transport Agency (GTA) services on the service recipient. This implies that companies, factories, corporations, and other organisations who hire GTAs are required to pay the GST rather than the GTA.
Q2. Who is eligible for ITC on GTA services?
Under the Reverse Charge Mechanism (RCM), the service user is primarily responsible for paying GST on goods transported by the Goods Transport Agency (GTA). This implies that companies, factories, organisations, and other organisations that use GTAs should pay the GST rather than the GTA.
Q3. What is the GST rate for GTA agency?
The following are the GST tax rates for products transported by a products Transport Agency (GTA), in addition to the circumstances already mentioned:
5% GST: Applied in the absence of an Input Tax Credit (ITC).
12% GST: Charged when an ITC is used.
Q4. A hired a GTA to transport his goods. The consideration charged was Rs. 1,200. Will Ajay pay GST?
Since the consideration for the shipping of goods in a single consignment is less than Rs. 1,500, A will not be required to pay GST under the Reverse Charge Mechanism (RCM).
Q5. B hired a GTA to transport goods. The GTA was asked to come for 2 days as B would receive the goods in batches. The entire consideration was Rs. 600. Will B pay GST?
Since the cost of shipping all of these items to a single consignee is less than Rs. 750, B will not be required to pay GST.
Q6. Who pays GST while hiring a GTA?
The service receiver will be billed via the Reverse Charge Mechanism unless the GTA decides to pay GST at 12%.
Q7. What exemptions exist for small consignments under GTA services?
Goods and small consignments shipped by non-GTA companies might not be subject to GST.
Q8. What is the limit for GTA for GST registration?
The limit for GTA for GST registration is Rs. 20 lakh in a fiscal year, with few exceptions (Rs. 10 lakh for states in exceptional categories).
Q9. Are any penalties applicable due to the non-compliance with GST regulations for GTAs?
Indeed, late submission, inaccurate returns, and noncompliance with GST regulations may result in fines.
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