Goods Transport Agency in GST

One of the most cost-effective and preferred modes of transport both for passengers and freight is road transport. Road Transport has emerged as the dominant segment in India’s transportation sector accounting for about 87% of passenger traffic and 60% of freight traffic movement in the country. Therefore let’s understand the implication of GST on Goods transport agency.

Transportation of Goods by Road

In terms of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.18), the following services are exempt from GST:

Services by way of transportation of goods:
(a) by road except for the services of:
(i) a goods transportation agency;
(ii) a courier agency;

(b) by inland waterways.

Thus services rendered by the transportation of goods by road except by GTA and courier agency is exempt from GST.

Who is a Goods Transport Agency?

Goods Transport Agency means any person who provides service in relation to the transport of goods by road and issues consignment notes. Thus, the issuance of the consignment note is an essential condition to be considered as a GTA. Intermediary and ancillary services not provided as independent activities to a person in relation to transportation of goods by road in a goods carriage such as –

• Loading/unloading
• Packing/ unpacking
• Trans-shipment
• Temporary warehousing etc.
  would form part of GTA services and would not be treated as a separate supply.

What is a Consignment Note?

A consignment note means 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 service provider will not come within the ambit of the Goods transport Agency if it is not issuing consignment note.

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

A consignment note is serially numbered and contains –

Charge of GST on services provided by Goods Transport Agency

GST is payable at the rate of 5% without ITC or 12% with Input Tax Credit. GST is leviable on GTA services under both reverse charge mechanism and forward charge mechanisms at the option of GTA.

The Reverse charge mechanism is applicable in case of supply of services by a GTA by way of transportation is given to –

• any factory registered under the Factories Act, 1948
• any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
• any co-operative society established by or under any law; or
• any person registered 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 established, by or under any law; or
• any partnership firm whether registered or not under any law including association of persons; or
• any casual taxable person.

Goods Transport Agency services specifically exempt

In terms of notification no.12/2017-Central Tax (Rate) dated 28.06.2017, the following services provided by a GTA by way of transport in a goods carriage is exempt from payment of tax:

• agricultural produce;
• 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;
• goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
• 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, calamities, accidents or mishap;
• defense or military equipment.

Person Liable to Pay GST on GTA services

Where services of GTA are availed by the following categories of persons in the taxable territory the GTA supplier has the option to pay tax (and avail ITC) @12% (6% CGST + 6% SGST); and if the GTA does not avail this option, the liability to pay GST will fall on the recipients of the services:

• Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or
• any society registered under the Societies Registration Act,1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
• any co-operative society established by or under any law; or
• any person registered 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 established, by or under any law; or
• any partnership firm whether registered or not under any law including association of persons; or
• any casual taxable person.

In all other cases where GTA service is availed by persons other than those specified above, the GTA service supplier is the person liable to pay GST.

Goods Transport Agency Registration under GST

A GTA does not have to register under GST on GST Portal if he is exclusively transporting goods where the total tax is required to be paid by the recipient under reverse charge basis. The turnover of the GTA is not relevant in determining its registration requirement.

GTA Returns under GST

A registered GTA will have to file the monthly returns-

• GSTR-1
• GSTR-2
• GSTR-3b.