Index

Background: .................................................................................................................................................. 2
Who is “GTA”? ............................................................................................................................................... 2
In relation to- ...................................................................................................................................................... 2
By road-................................................................................................................................................................. 2
Consignment note- ............................................................................................................................................ 3
Exemptions to GTA services under GST .................................................................................................. 3
Withdrawal of exemption in case of GTA services .................................................................................. 5
Value on which GST is to be paid? ............................................................................................................ 5
Free supply of fuel by recipient to GTA ....................................................................................................... 5
Rate of tax ...................................................................................................................................................... 6
Exercise of option by GTA ................................................................................................................................ 7
Whether GTA is required to mention rate of tax in declaration? ...................................................... 7
Classification of GTA services .................................................................................................................... 7
ITC eligibility to GTA ................................................................................................................................... 7
Who is recipient of GTA services? ............................................................................................................ 8
When tax is to be paid? ............................................................................................................................... 9
FCM ......................................................................................................................................................................... 9
RCM ........................................................................................................................................................................ 9
Continuous supply of GTA services ............................................................................................................ 10
Place of Supply (PoS) ................................................................................................................................. 10
What would be the location of supplier? ................................................................................................. 11
Documentation procedures for the recipient? .................................................................................... 11
GST registration of GTA ............................................................................................................................ 11
E-invoice ...................................................................................................................................................... 12
Non-applicability of e-invoice to GTA supplier ...................................................................................... 12
Declaration on tax invoice ............................................................................................................................ 12
Exemption on hiring of motor vehicle to GTA supplier. .................................................................... 12
Pointers for Professionals ........................................................................................................................ 12
Audit/Compliance Perspective: .................................................................................................................. 12
 “GST on Goods Transport Agency (GTA)”
Asha Latha T
CA Semi qualified

Background:
The GST law continues the provisions prevailing under the Service Tax regime. The law recognizes
that pure transportation of goods services is mostly provided by persons in the unorganized sector
and hence has specifically excluded such operators from the tax net. In respect of those who provide
agency services in transport, the liability is cast on the recipients in most of the cases or unless
option to pay under forward charge has been exercised by the GTA.
Before going to discuss GST implications, exemptions, rate etc,. on GTA services, let us understand
who is called the GTA in the first place.

Who is “GTA”?
GTA1 means any person who provides service in relation to transport of goods by road and issues
consignment note, by whatever name called. A transporter who doesn’t give a consignment note but
offers a challan or kaccha bill is called Goods Transport Operator (‘GTO’). The following needs
consideration in this regard-
a. service in relation to transport of goods;
b. by road;
c. issues consignment note, by whatever name called.

In relation to-
Here the word ‘in relation to’ has lot of significance and to be understood that any service which has
a direct or indirect connect with a specified service has to be treated as ‘in relation to’ that specified
service.

It includes not only the actual transportation of goods, but any intermediate/ancillary service
provided in relation to such transportation, like loading/unloading, packing/unpacking, trans-
shipment, temporary warehousing, etc. If these services are not provided as independent activities
but are the means for successful provision of GTA Service, then they are also covered under GTA.

By road-
The transportation needs to be provided by the road itself.

1 As per Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017
Consignment note-
We have understood that consignment note has lot of significance however it is neither defined under
GST nor in the GST notifications. Thereby guidance has been taken from the meaning ascribed to the
term under the explanation to Rule 4B of Service Tax Rules, 1994, as per which consignment note
should contain the following:
a. Serially numbered.
b. Name of the consignor and consignee.
c. Registration No of the Goods carriage in which goods are transported.
d. Details of the Goods sent.
e. Place of origin and place of Destination.
f. Person Liable to pay GST.

Flyer2 issued by CBIC dated 01-01-2018 has clarified that if a consignment note is issued, it indicates
that the lien on the goods has been transferred (to the transporter) and the transporter becomes
responsible for the goods till its safe delivery to the consignee.

It is only the services of such GTA, who assumes agency functions that is being brought into the
GST net.

The question arises here what if the GTA did not issue consignment note. In that case if the document
issued contains the particulars specified above, it still would be covered under GTA. The same was
clarified by Hon’ble Supreme Court in the case of Commissioner v. Premier Tobacco Packers Pvt. Ltd 3.

Exemptions to GTA services under GST

The following entries are found relevant for GTA services on perusal of exemption notification
No.12/2017- Central Tax (Rate) dated 28-06-2017. -
Entry No. Particulars Remarks

18 Services by way of transportation of goods- Transportation of goods are exempt

by road except GTA & courier agency
(a) By road except the services of-
services.
(i) A goods transportation
agency;
(ii) A courier agency;
(b) By inland waterways.
21 Services provided by a GTA, by way of GTA services for transporting these

2 Booklet, flyer and FAQ are issued for simple language and easy understanding, and they do not have force of law.
3 2018 (18) G.S.T.L. J38 (S.C.)
 transport in a goods carriage of- goods are only exempt.

(a) agriculture produce;

(d) milk, salt and food grain including
flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered
with the Registrar of Newspapers;
(g) relief materials meant for victims of
natural or man-made disasters,
calamities, accidents or mishap; or
(h) defence or military equipment.
21A Services provided by a GTA to an unregistered Hence transportation services
person (URD), including an unregistered provided by GTA to
casual taxable person (CTP), other than the URD/unregistered CTP are exempt.
following recipients, namely: -

(a) any factory registered

If provided to these specified
under/governed by the Factories Act,
recipients, then it is taxable.
1948; or
(b) any society registered under the
Societies Registration Act, 1860 or any
other law for the time being in force in
any part of India; or
(c) any co-operative society established
by or under any law for the time being
in force; or
(d) any body corporate established, by or
under any law for the time being in
force; or
(e) any partnership firm whether
registered or not under any law
including association of persons;
(f) any casual taxable person registered
under the CGST Act/IGST Act/SGST
Act/UGST Act.
 21B Services provided by a GTA, by way of GTA services provided to these
transport of goods in a goods carriage, to,- recipients are also exempt.

(a) A Department or Establishment of the

CG/SG/UT; or
(b) Local Authority; or
(c) Governmental agencies, which has
taken registration under the CGST Act
only for the purpose of deducting tax
u/s 51 and not for making a taxable
supply of goods/services.

Thereby transportation services provided by GTA other than services covered above are taxable.

Withdrawal of exemption in case of GTA services

Exemption has been withdrawn (w.e.f. 18-07-2022) on services provided by GTA in relation to
transportation of goods in goods carriage, where consideration charged-
• on a consignment transported in a single carriage not exceeding Rs.1500/-
• for transportation of all such goods for a single consignee not exceeding Rs.750/-.

Value on which GST is to be paid?

Section 15(1) of the Act provides the value of supply of good/service to be the transaction value
(price actually paid/payable) where the supplier and recipient are not related, and price is the sole
consideration for the supply.
Further, if recipient incurs any cost but which is liable to be incurred by GTA and not included in the
price charged by supplier, then such cost would be included in value of supply (as per section
15(2)(b) of the Act).
Generally recipient hires GTA for transportation services where price charged by the GTA would be
the sum factoring transportation charges, cost of fuel, and other incidental charges incurred by GTA
for providing such services.

Free supply of fuel by recipient to GTA

What if recipient of GTA services agreed to supply fuel to GTA on free of cost? Whether the cost of fuel
is to be include in value of supply as per section 15(2)(b) of the Act?

In this regard, para 1 of circular No. 47/21/2018-GST dated 08-06-2018 is to be referred which
clarifies that while calculating the value of the supply made by the Component Manufacturer (CM) to
Original Equipment Manufacturers (OEM), the value of moulds and dies provided by the OEM to the
CM on Free of Cost (FOC) basis shall not be added to the value of such supply because the cost of
moulds/dies was not to be incurred by the CM and thus, does not merit inclusion in the value of
supply in terms of section 15(2)(b) of the Act.
Based on above circular, the cost of fuel is not required to be included in value of supply.

However, a recent judgment by Chhattisgarh High Court in the case of M/s Shree Jeet Transport4 has
held diesel provided free of cost by the service recipient to the transporter providing GTA service be
added to the value for the purpose of GST based on the following observations-
a. Even by agreement between the GTA and service recipient, this statutory liability cannot be
sidelined by seeking to have the contract provide for recipient giving diesel FOC to GTA.
b. The value of service agreed to be provided necessarily will depend on the nature of service
and the nature of business as without fuel the entire business of GTA cannot survive.
c. Since the transportation is dependent on supply of fuel, it would be a crucial component to
run the business of GTA.
d. Therefore, the Circular No.47/21/2018-GST dated 8th June 2018 on which the petitioner
tried to rely upon would not be of any help especially considering the nature of business and
the provisions of Section 7(1)(a) and 15(2)(b) of CGST Act.

Rate of tax
The following table depicts the rate of tax applicable on GTA services along with mode of discharge of
tax i.e., Forward Charge (FCM) and Reverse Charge (RCM).
(Entry 9 of rate notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 read with entry 1 of
RCM notification No. 13/2017- Central Tax (Rate) dated 28-06-2017)

Option exercise by GTA to Rate of RCM or FCM ITC eligibility to GTA

itself pay GST on GTA tax
services provided?

Not exercised 2.5 RCM Not eligible

Exercised 2.5 FCM Not eligible

6 FCM Eligible

Exercise of option by GTA

a. The option by GTA to pay itself (i.e., FCM) on the services supplied by it during a Financial Year
(FY) shall be exercised by making a declaration in Annexure V on or before 15th March of the
preceding FY.

4 WPT No.117 of 2022

 b. Once GTA opts for RCM or FCM for a FY the same cannot be switched to FCM or RCM,
declaration once filed cannot be withdrawn for that FY. And the declaration so furnished will
be valid for one FY only.
c. If in case GTA fails to file, the declaration they will not be able to provide services under FCM.

Whether GTA is required to mention rate of tax in declaration?

a. The same is not clarified however, considering the specimen notified, GTA is not required to
mention that the services will be provided at a 12% or 5% GST rate on the forward charge
basis in the declaration.
b. GTA can also switch between the forward charge GST rates i.e., 12% and 5%, but the credit of
input tax credit will have to be taken proportionately in that case.

Author’s suggestions: It is advised the procurement team of any registered person to check the
option exercised by the GTA and then comply for liability, if any under reverse charge.

Classification of GTA services

Relevant changes have been made in CGST Notification (Rate) No. 11/2017 dated 28.06.2017. to
avoid confusion in classification of GTA Service whether under HSN 9965 or 9967. Now, GTA services
shall be classified under SAC 9965 only, whereas ‘Support services in transport’ shall be classified
under SAC 9967.
An explanation has been inserted in SAC 9967 to clarify the same – “This entry does not include goods
transport service involving Goods Transport Agency (GTA) service, which falls under Heading 9965’’.

It is now mandatory to follow HSN 9965 for GTA services and HSN 9967 no longer applies to GTA
services and only to transport services taxable @18%.

ITC eligibility to GTA

As seen in table above, ITC is not eligible to GTA in the following two cases-
a. Where GTA did not opt to pay under FCM and
b. Where GTA opted to pay under FCM but IGST @5% (or CGST& SGST @2.5% each)

Explanation 4(iv) to the exemption notification No. 12/2017 ibid provides the following w.r.t. the ITC
restriction to GTA-
a. credit of input tax charged on goods/services used exclusively in supplying such service has
not been taken; and
b. credit of input tax charged on goods/services used partly for supplying such service and
partly for effecting other supplies eligible for input tax credits, is reversed as if supply of
such service is an exempt supply.
Let us understand the above with the following illustrations:
Case 1: ITC of Rs. 1,00,000/- was charged to GTA on goods & services procured for supplying GTA
services. In this case, GTA is not eligible to take credit of Rs.1,00,000/-.
Case 2: Say GTA is also engaged in the sale of laptops (taxable and completely eligible for credit) and
GTA services. ITC on common inputs procured for both the GTA services & laptops is Rs. 5,00,000/-.
Turnover from GTA services and laptop sales is Rs.8,00,000/- and Rs. 10,00,000/- respectively. In
such case, ITC attributable to GTA services is to be reversed considering GTA services as exempt
supply for the purposes of ITC reversal, as follows:

ITC to be reversed = Rs. 2,22,222.22/- [i.e., Rs. 5,00,000*(8,00,000/ 18,00,000)]

Author’s suggestions: It is advised to maintain separate track of expenses when GTA is also engaged
in other taxable supplies eligible to credit (otherwise ITC may need to be reversed more if GTA
turnover exceeds other taxable turnover).

Who is recipient of GTA services?

Wherever GST under RCM is applicable on GTA services (as discussed earlier), recipient of GTA
services is liable to pay GST under RCM. Here the question arises who would be called the recipient of
GTA services as either the seller or buyer of goods will arrange for transportation.

Explanation (a) to the RCM notification No. 13/2017 ibid provides that the person (located in taxable
territory) who pays or liable to pay freight for the transportation of goods shall be treated as the
person who receives the service. Let us take the following cases (assuming GTA did not opt for FCM)-
a. If the consignor (being a specified person) pays freight to
GTA then he will be treated as the recipient of GTA
services, and liable to pay GST under RCM.
b. If the consignee (being a specified person) is liable or pays
the freight payment then he will be treated as the recipient
of GTA services, and liable to pay GST under RCM.

When tax is to be paid?

Time of Supply (ToS) provisions under law provides when tax is required to be paid.

FCM
Section 13(2) of the CGST Act, 2017 provides ToS for services liable to GST under FCM as earlier of a
&b below-
a. earlier of-
 i. date of invoice issued by GTA or
ii. date of provision of service by GTA (if invoice is not issued before or after 30 days
from date of supply of service) or
iii. the date of receipt of payment by GTA (earlier of date of payment entry in GTA’s BoAs
or date of credit in GTA’s bank account) or
b. date of expense entry in the recipient’s BoAs (if above clause do not apply).

Let us understand the above provision with the help of below illustrations.
Particulars Case 1 Case 2
Date of provision of GTA service 25-01-2024 25-01-2024
(a)
Date of invoice issued by GTA 22-02-2024 (within 30 days 27-02-2024 (not within 30
(b) from 25-01-2024) days from 25-01-2024)
Date of receipt of payment by 26-01-2024 26-01-2024
GTA (c)
ToS 26-01-2024 25-01-2024
(earlier of b or c) (earlier of a or c)

Generally, GTA issues invoice to the customer only when the “Proof the delivery” (POD) is submitted
to the RCI by the driver who delivered the goods to customer. The date of POD can be considered as
date of completion of service. In few circumstances there may delay in driver submitting the POD, this
leads to delay in raising of invoice by GTA to the customer.

RCM
Section 13(3) of the CGST Act, 2017 provides time of supply for services liable to GST under RCM as
earlier of a, b& c below-
a. earlier of-
i. date of payment entry in the recipient’s BoA or
ii. date of debit for payment in recipient’s bank account; or
b. 61st day from the date of invoice issued by GTA; or
c. date of expense entry in the recipient’s BoA (if above two clauses do not apply).

Let us understand the above provision with the help of below illustrations.
Particulars Date
Date of payment entry in recipient’s BoAs (a) 25-01-2024
Date of debit for payment in recipient’s BoAs (b) 22-02-2024
Invoice date (c) 26-01-2024
61st day from invoice date (d) 27-03-2024
ToS 25-01-2024 (earlier of [earlier of a or b] or d)
Continuous supply of GTA services
Sometimes contracts would be entered between the GTA and recipient to provide transportation
services over a period of time. In such cases, it is required to determine whether the same qualifies as
continuous supply of services, as due date of issue of invoice is different for continuous supply of
services. Section 2(33) of the CGST Act, 2017 provides continuous supply of services to mean as
follows-
a. supply of services provided or agreed to be provided,
b. continuously or on recurrent basis, under a contract,
c. for a period exceeding 3 months
d. with periodic payment obligations.

Section 31(5) of the Act provides when invoice is to be issued for continuous supply of services. The
same is depicted in the below table:
Particulars Invoice is to be issued on or before the
following-
If due date of ascertainable due date of payment
payment in the
contract is- not ascertainable date of receipt of payment by GTA
If payment is linked to the completion of an date of completion of the event
event.

If GTA services qualify as continuous supply of services, then invoice is to be issued as per above
provision and accordingly ‘when tax is to be paid’ is to be determined as per section 13(2) & 13(3) as
discussed above.

Place of Supply (PoS)

PoS of services by way of transportation of goods is summarised as below-
Provision under Particulars Recipient’s PoS
IGST Act, 2017 status

Section 12(8) Location of GTA and registered Location of recipient

the recipient are
URD Location at which such goods are
located in India
handed over for their transportation

Section 13(9) Either location of Not The destination of such goods

GTA or recipient applicable
are located outside
 India

From above it is understood, determining the location of supplier is also utmost important to
determine PoS.

What would be the location of supplier?

Here question arises as to what would be the location of supplier when service is being provided
from multiple states registered under GST? The same can be understood with the following example
where-
-Indent is raised by the customer to State A
-Consignment note is issued from State B
-Vehicle with which services are provided belongs to State C
-Invoice for the service provided is raised from State B
There is no specific provision to ascertain the location of supplier in the above situation.
It is suggested to ensure all the relevant documents such as agreement, consignment note, invoice.,
etc are executed from the billing state.

Documentation procedures for the recipient?

Generally, the documentation aspects (invoice, debit note & credit note etc.) have to be complied by
the supplier of good/service. However, in the following cases, recipient of GTA services (when liable
to GST under RCM) are required to issue the following documents:

Document type GTA supplier status When to be issued

Self-invoice unregistered on the date of receipt of GTA services
Payment voucher unregistered or registered at the time of making payment to the GTA
supplier

GST registration of GTA

Further if GTA is solely engaged in transportation services and did not opt to pay itself, it is said to be
exclusively engaged in services liable under RCM, hence GTA need not get registration 5.

5 As per Notification No.5/2017

E-invoice
Non-applicability of e-invoice to GTA supplier
In terms of Rule 48(4) read with CGST Notification No. 13/2020 dated 21.03.2020, GTA is exempted
from complying with e-invoicing requirements even if their aggregate turnover in any of PY’s exceeds
the prescribed threshold of issuing e-invoice [i.e. INR 5 Crores w.e.f. 01-08-2023].

Declaration on tax invoice

Rule 46 of CGST Rules, 2017 (amended vide CGST Notification No. 14/2022 dated 06-07-2022)
provides that declaration is required to be added in tax Invoices being issued by the GTA for non-
applicability of e-invoice on account of exemption provided in the Rule 48(4) of CGST Rules, 2017.
“I/We hereby declare that though our aggregate turnover in any preceding financial year from
2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are
not required to prepare an invoice in terms of the provisions of the said sub-rule.”

Hence, any GTA not required to issue e-invoice even having aggregate turnover exceeding the
prescribed limit in any F.Y. 2017-18 onwards shall be required to mention the above declaration
while issuing tax invoices to its customers.

Exemption on hiring of motor vehicle to GTA supplier.

Entry no.23 of exemption notification No. 12/2017 ibid provides exemption to inward supply of
hiring of motor vehicle by GTA. Hence, if any GTA receives hiring of motor vehicle, no tax is to be
charged by the supplier.

Pointers for Professionals

Audit/Compliance Perspective:
1. Understanding the status of the recipients by GTA: registered, unregistered, or specified.
2. GST registration requirement for GTA.
3. Rate of GST, FCM/RCM, and GST liability.
4. Credit aspects:
a. Proper computation/reversal of ITC as per Rule 42 and 43 for common credits.
b. Proper disclosure of eligible and ineligible credit in GSTR-3B
5. Option exercise by GTA for FCM.

The views expressed are strictly personal and based on position of law prevailing as on date. This cannot
be regarded as an opinion. For any queries or feedback please write to t.ashalatha2001@gmail.com.