GST On Goods Transport Agency (GTA) Services

Topics covered in this Article :

• What is GTA
• What is Consignment Note
• Contains of Consignment Note
• Taxability on transportation services by GTA
• Registration Requirement of GTA
• Services covered under RCM if provided by GTA
• Reverse Charge if the GTA is unregistered
• Other Services provided by GTA
• Who will pay under Reverse Charge
• GST Rates for GTA
• The last date to exercise the option to pay under the forward charge mechanism
• GTA Services which are exempted from GST
• Place of Supply for a GTA
• FAQs (Frequently Asked Questions)

In this article, we shall understand all about the impact of GST on goods transport services. We will delve into topics like RCM on transportation / RCM on freight Charges, registration requirements, GST on hiring of vehicles, GST Rate on transport of goods by road, related notifications etc.

What is GTA:

The full form of "GTA" in the context of GST is "Goods Transport Agency." According to Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017, "Goods Transport Agency" or GTA means the person who provides goods transport services by road and issue consignment note. A consignment note is also known as builty.

What is Consignment Note:

A Consignment Note is a document that contains particulars of goods for shipment and which provides proof that the consignment has been received by the carrier (goods transportation agency) for delivery. If a Consignment note is not issued by the Transporter, then the service provider will not fall under the definition of GTA (Goods Transport Agency).

Contains of Consignment Note :

• Consignor's details (name, address, and contact information, etc.)
• Consignee's details (name, address, and contact information, etc.)
• Registration number of the carriage of the goods in which the goods are transported
• Details of the goods
• Place of origin
• Place of destination.
• Consignment Note Number
• Charges and Payment Details
• Signature and Date
• Person is liable to pay GST – consignor, consignee, or the GTA.
• Other Relevant Information (like any specific instructions for shipment)
• Terms and Conditions

Taxability on transportation services by Road under GST :

In GST, the service of transportation of goods has been exempted from GST through Entry Number 18 of Notification No.12/2017- Central Tax (Rate), but, if the transportation of goods is being done through the below mode, then the services Will become taxable:-

• A goods transportation agency
• A courier agency

If transportation of goods is done through GTA or Courier Agency, then GST will apply to these services.

Registration Requirement of GTA:

According to section 22 of CGST, if the aggregate turnover of a person is above Rs. 20 lakh or in special category states it is above Rs.10 lakh, then it is mandatory to get GST registration.

But, as per section-23(2) and Notification No. 05/2017- Central Tax, It has been specified that if a person supplies such goods, services, or both on which the liability to pay GST falls on the recipient in RCM, that the person is exempted from taking registration.

With this, we can say that if the turnover of any service provider is above Rs.20 lakh/ Rs.10 Lakhs (as the case may be). But, all his tax liability is payable by the recipient in RCM, in that case, GTA is not required to take registration.

Services covered under RCM if provided by GTA:

According to Section 9(3) of CGST ACT 2017, the Government, on the recommendation of the Council, may notify a special category, in which the liability to pay tax on the supply of goods, services, or both is shifted on the recipient on the Reverse Change Mechanism.
According to Notification No.13/2017- Central Tax (Rate), if the service of transportation of goods is provided to the below-specified person in the taxable territory, then, in that case, such services will be covered in RCM: -

• 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; located in the taxable territory.

If GTA is not registered in the forward charge mechanism, in that case, the person specified above will have to pay tax in reverse charges. But, if the GTA is registered in a forward charge mechanism, then in that case GTA will pay tax.

Reverse Charge if the GTA is unregistered:

If the unregistered person does not fall in the above category, then the applicability of RCM will not come. Along with this, an unregistered transporter firm (GTA) will also not have to pay any tax.

Other Services provided by GTA:

Services not only include transportation of goods but also other intermediate/ancillary services, such as:

• Loading/unloading
• Packing/ unpacking
• Transshipment
• Temporary warehousing etc.

If the above services are not being provided independently then they can be included with GTA services.

Who will pay under Reverse Charge:

The person who is located in the taxable territory and who is liable to pay freight for the transportation of goods will be considered as receiver of service.

GST Rate on transport of goods for GTA:

If the GTA has opted for the option to pay GST under the forward charge mechanism, then the GTA has 2 options to pay GST
If he wants to claim ITC then pay GST at the rate of 12%.
But, if do not want to claim ITC then GST will be paid at the rate of 5%.

Last date to exercise the option to pay under the forward charge mechanism :

As per Notification No. 06/2023- Central Tax (Rate) dated 26-07-2023, the last date to exercise the option to pay GST under the forward charge mechanism is 31st March of the preceding financial year. The starting date for exercising the option will be 1st January of the preceding financial year.

GTA is not required to file a declaration to exercise the option to pay GST under the forward charge mechanism every year. If they have exercised this option for a particular financial year, then it will be deemed that they have exercised it for the next and future financial years, unless they file a declaration n in Annexure VI to revert under the reverse charge mechanism on or after the 1st January of the preceding Financial Year but not later than 31st March of the preceding Financial Year.

Example: If Amar Goods Carrier wants to pay GST under forward charge in the financial year 2024-25, then he will have to opt for this option to pay GST under the forward charge mechanism on or before 31st March in the current financial year (2023-24).

GTA Services which are exempted from GST:

According to Entry No. 21 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 if services provided by a goods transport agency, by way of transport in a goods carriage of below cases are exempt:–

• Agricultural produce;
• Milk, salt, and food grains 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 mishaps; or
• Defence or military equipment.

Services by way of giving on hire :

According to Entry Number 22 of Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 in the below cases services by way of giving on hire is exempt :

• To a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
• To a goods transport agency, a means of transportation of goods.

Example :-

Let us assume that Mr. A is a Goods transport agency (GTA). Mr. A does not own any truck. Mr. A provides the service of goods delivery by arranging trucks from others and Mr. A issues consignment note to good recipient.

Q1. Will GST be charged on hire charges?
Ans : No, as per Entry No. 22 of Notification No.12/2017-Central Tax Rate, hire charges is exempt from GST.

Q2. Is there any liability for Mr.A to pay GST?
Ans : If the option of forward charge has not been exercised by Mr. A, then Mr. A will not be liable for GST. The service receiver will have to pay GST in RCM.

Place of Supply for a GTA

According to section 12(8) of the IGST Act 2017, the place of supply for services of transportation of goods is as follows:
If these services are being provided to a registered person then the location of that person will be considered as place of supply.
If these services are being provided to other than registered person then the location where the goods are being handed over for transportation will be considered as place of supply.

FAQ (Frequently Asked Questions) :

Question 1: Mr. B is a single truck owner-operator and he plies his truck mostly between States and carries the goods booked by an agent. Is there any requirement to take GST Registration if the aggregate value of service exceeded twenty lakh rupees during last year?
Answer: Mr. B is not liable to take GST Registration, as services provided by way of transportation of goods by road are exempt vide Notification number 12/2017-Central Tax (Rate), dated 28th June, 2017.

Question 2: Mr. B owns some trucks and he rented his trucks to others, who provide GTA service. Should B is required to take GST Registration in the case if the aggregate value of service exceeds twenty lakh rupees? Does monthly rental/lease income attract GST in case of hire charges?
Answer: Mr. B is not required to take Registration, since services by way of giving on hire, a means of transportation of goods to a GTA are exempt from tax vide entry no. 22 of Notification number 12/2017-Central Tax (Rate) dated 28th June, 2017.

Question 3: Is transportation of agricultural produce attract RCM?
Answer: According to Entry No. 21 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 if services provided by a goods transport agency, by way of transport of Agricultural produce are exempt.
According to explanation no.(vii) of para 4 of Notification No. 11/2017 (central tax rate) :-

"agricultural produce" means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fiber, fuel, raw material, or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for the primary market.

Question 4: Mr. C is a broker of a truck supplier. Mr. C gets orders for truck owners and quotes the rate for transportation to GTA on behalf of truck owners. In lieu of this, Mr. C receives a small amount as commission out of the truck hire fixed with the GTA. This brokerage is paid by the truck owners. As the services provided by way of transportation of goods by road are exempt from tax, is Mr. C liable for registration?
Answer: This commission income will not fall under the exemption category. Mr. C is required to take GST registration if the aggregate amount of commission received exceeds Rs. 20 lakhs (Rs. 10 lakhs in special category States).

Question 5: What are the documents required to be maintained for services of transportation?
Answer: In terms of section 35(2) of the CGST Act, 2017 transporter is required to maintain records of the consigner, consignee, and other relevant details of the goods. Further, in terms of rule 56 of the CGST Rules, 2017 transporter is required to maintain records of goods transported, delivered, and goods stored in transit by you along with the GSTIN of the registered consigner and consignee.

Question 6: Are intermediary and ancillary services like loading/unloading, packing/unpacking, transshipment, and temporary warehousing, provided in relation to transportation of goods by road to be treated as part of the GTA service, being a composite supply, or these services are to be treated as separate supplies.
Answer: The GTA provides service to a person in relation to the transportation of goods by road in a goods carriage, which is a composite service. The composite service may include various intermediary and ancillary services like loading/unloading, packing/unpacking, transshipment, and temporary warehousing, which are provided in the course of transport of goods by road.

These services are not provided as independent services but as ancillary to the principal service, namely, transportation of goods by road. The invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services.

In view of this, if any intermediary and ancillary service is provided in relation to the transportation of goods by road, and charges, if any, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply.

In fact, any service provided along with the GTA service that is part of the composite service of GTA shall be taxed along with GTA service and not as separate supplies. However, if such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies.

Question 7: Mr. B is GTA, he does not have any other income other than services from transportation by goods by road. If his turnover exceeds Rs. 20 Lakhs, Is Mr. B required to take GST Registration?
Answer: As per Notification number 05/2017-Central Tax dated 19th June, 2017, the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on a reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the CGST Act, 2017 are exempted from obtaining registration under the said Act.
So, Mr. B, a GTA providing service in relation to the transportation of goods by road under RCM can avail the benefit of this exemption.

Question 8: Whether input tax credit is available to the recipient of service when the GST paid by him is at a concessional rate of 5% under RCM.
Answer: Yes, input tax credit is available in such cases.

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