Transport of goods by road is the most commonly used mode of transportation for businesses which supply goods. This transportation by road is facilitated either by a Goods Transport Agency (GTA) or common carriers such as autorickshaw or courier agencies. In this blog, we will understand what is meant by a Goods Transport Agency (GTA) and the GST rates for transportation service provided by a Goods Transport Agency. This is the first blog in the series wherein, we will understand the various tax provisions with respect to services provided by Goods Transport Agencies and the tax impact on persons taking their services.
GST registration is mandatory in India for entities having more than Rs. 20 lakhs of aggregate turnover in a year (Rs. 10 lakhs in Special Category states). However, some of the supplies provided by a goods transport agency would be liable for GST under reverse charge basis. In a reverse charge transaction, the recipient of the goods is made liable for payment of GST. Hence, while providing services, goods transport agency must be aware of the reverse charge mechanism and raise invoice accordingly.
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.
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-
- Packing/ unpacking
- Temporary warehousing etc.
- If these services are included and not provided as independent activities, then they are also covered under GTA.
What will be the rate of Tax in Case of the Goods Transport Agency (GTA Services) under GST Per se?
Looking at the entry no. 3, Services of goods transport agency (GTA) in relation to transportation of goods [other than used household goods for personal use]. The rate mentioned in the rate schedule is 5% (without ITC)
Entry no. 4 of the rate schedule prescribed says that Services of goods transport agency in relation to transportation of used household goods for personal use. The rate prescribed is 5% even in this case.
Important point to highlight here is that the transporter providing any other services like “Right to use” or “Leasing” of the vehicles, he will have to review the rates separately and not take the 5% as his rate.
This means that generally the rate is 5% for the GTA under GST. The point to be highlighted is that NO ITC is available to the transporter in this case.
Persons Required to Pay GST on Reverse Charge
When taking the services of a goods transport agency, the following types and class of entities would be required to pay GST on reverse charge basis.
- Factories registered under the Factory Act.
- Societies registered under the Society Act.
- Any co-operative society.
- Any person who is registered under GST.
- Any Body Corporate (Company or LLP)
- Any partnership, if registered or not as well as AOP.