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However, there are cases where services rendered by a GTA are chargeable to tax.
This article talks about GST on transport, Goods Transport Agency (GTA) and the various
provisions that are applicable to a GTA under GST.
It is important to distinguish between a GTA and a transport owner because of the exemption
provided on the services by way of transportation of goods. Accordingly, the following set of
services are exempt from GST.
This means that if a transporter does not issue the consignment note, the service provider will not
come within the ambit of GTA. However, if a transporter issues a consignment note, it indicates
that the lien of goods has been transferred to the transporter.
Hence, such a transporter becomes responsible for the goods till such goods are delivered to the
consignee.
In other words, only the services rendered by such a GTA who assumes agency functions are
brought under the GST net. Whereas the individual truck or tempo operators who do not issue
any consignment note are not covered within GTA.
This is to say that services provided by such individual transporters who do not issue a
consignment note would be exempt from GST.
As per para 1 serial no. 9 (iii) of notification no. 11/2017 – Central Tax (rates), a GTA
providing services in relation to transportation of goods including used household goods for
personal use can pay effective GST of 5% (2.5% CGST and 2.5% SGST) on such services.
However, if the GTA chooses to avail this option, it is subject to a condition that the credit of the
input tax charged on goods and services used in supplying the service has not been taken.
As per notification no. 20/2017, a GTA can provide services pertaining to transportation
of goods including used household goods for personal use by paying effective GST of 12% (6%
CGST and 6% SGST). However, if the GTA chooses to avail this option, it is subject to a
condition that a GTA can avail a credit of input tax charged on goods and services used in
supplying the transportation services.
Accordingly, a GTA can pay GST at the rate of 12% under forward charge and claim ITC on the
goods and services used to provide goods transportation services to the recipient. Even the
recipient of goods and services can avail ITC of the GST paid.
9965 Services of transporting goods by GTA to 12% (6% Provided a GTA can avail a credit of
specified recipients CGST and 6% input tax charged on goods and
SGST) services used in supplying the
transportation services
9965 Services of goods transport agency (GTA) 5% (2.5% Provided the credit of input tax
in relation to transportation of goods CGST and charged on goods and services used
including used household goods for 2.5% SGST) in supplying the service has not been
personal use taken
Registration of a GTA
As per section 22 (1) of CGST act 2017, every supplier shall be liable to get registered under
GST in a state or UT if his aggregate annual turnover in a financial year exceeds Rs. 20 lakhs in
case of services.
Such a supplier is liable to be registered in a state or UT from where he makes a taxable supply
of goods or services. Also such a state or UT is other than special category states. This means
that the moment the aggregate turnover of a GTA exceeds Rs. 20 lakhs, he is required to get
registered under GST mandatorily.
However, this threshold limit of 20 lakhs shall reduce to Rs. 10 lakhs in case a GTA has business
in any of the special category states such as the north – eastern or hilly states. In addition to this,
there are cases where a GTA supplies services subject to reverse charge.
As per notification no. 5/2017 – Central Tax dated June 19, 2017, ‘the persons who are only
engaged in making supplies of taxable goods or services, the total tax on which is liable to be
paid on reverse charge basis by the recipient of such goods or services under section 9(3) of the
CGST act, 2017 are exempted from obtaining registration under the act.’
This means a person or GTA is not required to obtain registration under GST if he is exclusively
supplying goods or services the total tax on such goods or services is required to be paid by the
recipient under reverse charge mechanism. This is despite the fact that his annual aggregate
turnover exceeds Rs. 20 lakhs.
Also, as per section 23(1) of the CGST Act, 2017, any person supplying goods or services that
are fully exempt from tax are not required to take registration under GST.
Let’s understand when a GTA needs to register under GST with the help of the following
example.
Example
ABC Logistics, a GTA registered in Haryana, provides services pertaining to the transportation of both
taxable and exempted goods. Following table showcases different scenarios under which ABC Logistics
provides transportation services to recipients.
Class I
Total Turnover Rs 15 Lakhs Aggregate Turnover is less than Rs 20 Lakhs. GTA is not
required to register.
Class II
Class III
Total Turnover Rs 21 Lakhs Aggregate Turnover is more than Rs 20 Lakhs. But since
GTA is supplying exempted goods, he is not required to
register
Class IV
However, if the GTA does not avail this option, then the liability to pay GST would fall on the
recipient of goods and services under reverse charge basis. But, if the recipients do not belong to
any of the categories mentioned above, then in all such cases, a GTA becomes liable to pay GST.
In addition to this, the GST Council inserted a new clause 21A via Notification No. 32/2017-
Central Tax (Rate) dated 13th Oct 2017. As per this clause, services provided by a GTA to an
unregistered person, including an unregistered casual taxable person, are exempted from GST.
Note: GTA services rendered to an unregistered person is exempted as per Notification No.
32/2017 – Central Tax (Rate) dated October 13th, 2017. However, this notification was
cancelled as on December 31, 2018. This means that GST must be paid under RCM for
unregistered purchases on the list of supplies as specified. Such a list of supplies is yet to be
specified by the Council.
Now, for the purpose of this notification, the recipient of services would be: “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.”
And if the consignor belongs to any category of persons who are required to pay GST under
reverse charge as mentioned above, then he will pay GST under reverse charge.
Case II: Where the Consignee Pays Freight to the GTA
Suppose that the Consignee of goods (Recipient) pays freight for transporting the goods to the
GTA. As per the rule above, since the Consignee (Recipient) is the one who pays freight to the
GTA, he will be considered as the recipient of goods in this case. And if the Consignee belongs
to any category of persons who are required to pay GST under reverse charge as mentioned
above, then he will pay GST under reverse charge.
Inter-State Supply
As per section 7 of the IGST Act, 2017, a supply is treated as an inter-state supply if the location
of the supplier and the place of supply are in:
Intra-State Supply
As per section 8 of the IGST Act, 2017, a supply is treated as an intra-state supply where the
location of the supplier and the place of supply are in the same State or the same Union
Territory.
Since now we have an understanding what inter-state and intra-state supply mean, let’s
understand the rules for determining the place of supply in case of transportation of goods by
road by a GTA.
In case the transporter is unregistered, he needs to make an application for registration under
GST through Form GST ENR-01. This form is used by unregistered persons to take enrolment
under GST for (i) warehouse or depot, (ii) godown, (iii) cold storage and (iv) transportation
services.
Such persons need to submit all the details regarding their business like address, contact
information, constitution of business, nature of premises, details of additional place of business
etc in Form GST ENR-01. Once all these details are validated, a unique enrolment number
would be generated and communicated to the concerned person.
Therefore, any person who undertakes the business of transporting goods needs to maintain
record of goods transported, delivered and goods stored in transit.
Furthermore, he also needs to maintain a record of the GSTIN of the consignor and consignee for
each of his branches.