Goods Transport Agency under GST

Transportation is a vital part of the 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 covered articles on transport by rail & air. In this article, we will discuss the goods transportation and GTA (Goods Transport Agency) and the provisions of GST applicable on them.

Latest updates

50th GST Council meeting   
In the 50th GST Council meeting held on 11th July 2023, the Council provided a relaxation for Goods Transport Agencies (GTAs) wishing to pay GST on a forward charge basis. GTAs will not be required to file a declaration for paying GST under forward charge every year. The option, once exercised for a particular financial year, will be deemed to have been exercised for future financial years unless a declaration is filed to revert that decision. 

Further, the deadline to exercise this option will now be 31st March of the preceding financial year instead of 15th March.
Note: These decisions will come into force once notified by the CBIC.

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 is 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: 

• by road except the services of:
  • a goods transportation agency;
  • a courier agency
• by inland waterways.

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

Watch and learn easily about GTA rules under GST-

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 the goods transport agency. 

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 –

• 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

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 the Service tax laws too. 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? 

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

** On 31st Dec 2018, The Government cancelled Notification No. 32/2017- Central Tax (Rate) dated 13th October, 2017, thereby making purchase from unregistered dealers taxable. However, the list of registered persons or transactions is yet to be notified.

^ Declaration must be given in Annexure - V by 15th March of the year before the financial year begins. The GTA must give below declaration while issuing invoices.

Is a GTA liable to register?

There was a lot of confusion about 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 Mechanism (RCM) applies is exempted from obtaining 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 the threshold limit).

Also, if your GTA is GST registered, you can check the authenticity of the GSTIN using the GST search tool.

Scenarios for Registration for a Goods Transport Agency* 

* The threshold for GST registration has been increased to Rs.40 lakh for supplier of goods.

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.

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:-

• Factory registered under the Factories Act,1948;
• A society registered under the Societies Registration Act, 1860 or under any other law
• A co-operative society established under any law;
• A GST registered person
• A body corporate established by or under any law; or
• A partnership firm whether registered or not (including AOP)
• 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, then he will pay GST on reverse charge basis. 

Various Scenarios to Determine Who is Liable to pay GST in case of a GTA

** GTA services to an unregistered person is exempted as per Notification No. 32/2017- Central Tax (Rate) dated 13th October 2017. However, this notification is cancelled as of 31st Dec 2018 and hence, tax must be paid under RCM for unregistered purchases on the notified list of supplies. However, the list is yet to be notified.  

Reverse Charge if the GTA Is Unregistered

As per Notification No.32/2017-Central Tax (Rate) dated 28th June 2017, intra-state supplies of services or both received by a registered person from any unregistered supplier, was exempted from GST if it does not exceed Rs. 5,000 in a day. However, the Government has cancelled the notification and hence, RCM applies on unregistered purchases for only a specified list of supplies, which is yet to be notified.

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 in to pay GST at the beginning of the financial year.  

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

If Service Receiver pays GST under RCM

Service receivers can always avail ITC on GST paid under RCM whereas the GTA cannot claim ITC in such cases.

Invoicing for GTA

Any GST compliant invoice of a GTA must have following details-

• Name of the consignor and the consignee
• Registration number of goods carriage in which the goods are transported
• Details of goods transported
• Gross weight of the consignment
• Details of place of origin and destination
• GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency
• Name, address and GSTIN (if applicable) of the GTA
• Tax invoice number (it must be generated consecutively and each tax invoice will have a unique number for that financial year)
• Date of issue
• Description of service
• Taxable value of supply
• Applicable rate of GST (Rates of CGST, SGST, IGST, UTGST and cess clearly mentioned)
• Amount of tax (With breakup of amounts of CGST, SGST, IGST, UTGST and cess)
• Whether GST is payable on reverse charge basis
• Signature of the supplier

Payment of Tax by a GTA

The payment of tax will be only through cash in the normal modes of card/netbanking/cash/UPI/IMPS (only for taxes upto Rs.10,000).

Returns to be Filed by a GTA

If all the services of the GTA fall under RCM then a GTA is not required to register. If a GTA registers, then it will have to file the normal 2 returns – GSTR-1 (sales) and GSTR-3B (summary & tax liability) either monthly or quarterly and one Annual return in form GSTR-9.

How to determine Place of Supply for a GTA

The place of supply of services by way of transportation of goods, including by mail or courier to–– 

(a) a registered person, shall be the location of such person 

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

Examples for determining place of supply

Rajesh is a registered dealer in Bangalore. He hires a GTA to deliver goods to Mumbai.
Place of supply will be Bangalore.  

Anita is an unregistered dealer in Gujarat who hires a GTA to deliver goods to Rajasthan. 
Place of supply will be Gujarat where Anita hands over the goods to the transporter.  

Vikas is registered in both Mumbai and Bangalore. He hires a transporter (based in Mumbai) to deliver from Bangalore to Delhi. 
CGST & SGST will be applicable. If the transporter is based in Chennai, then IGST will be applicable. 

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