Transportation is a vital part of 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 already covered transport by rail & air.
In this article, we will discuss the goods transportation and GTA (goods transport agencies) and the provisions of GST applicable on them.
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 are 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:
(a) by road except the services of:
(i) a goods transportation agency;
(ii) a courier agency
(b) by inland waterways.
Therefore, the service of transportation of goods by road continue to be exempt even under the GST regime. GST is applicable only on goods transport agency, 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.
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 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 its 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 Service tax. 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?
Service by a GTA GST rate
Carrying-
- agricultural produce
- milk, salt and food grain 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
- defence or military equipment
0%
Carrying-
goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500
0%
Carrying-
goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750
0%
Any other goods 5% No ITC
OR
12% with ITC
Used household goods for personal use 0% **
Transporting goods of unregistered persons 0% **
Transporting goods of unregistered casual taxable persons 0% **
Transporting goods (GST paid by GTA)* 5% No ITC
or
12% with ITC
Transporting goods of 7 specified recipients* 12% with ITC (paid by GTA)
Or
RCM 5% with ITC
Hiring out vehicle to a GTA 0%
*As per Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017
** As per Notification No. 32/2017- Central Tax (Rate) dated 13th October, 2017
Service by a GTA | GST rate |
Carrying-
| 0% |
Carrying-
goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500
| 0% |
Carrying-
goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750
| 0% |
Any other goods | 5% No ITC
OR
12% with ITC
|
Used household goods for personal use | 0% ** |
Transporting goods of unregistered persons | 0% ** |
Transporting goods of unregistered casual taxable persons | 0% ** |
Transporting goods (GST paid by GTA)* | 5% No ITC
or
12% with ITC
|
Transporting goods of 7 specified recipients* | 12% with ITC (paid by GTA)
Or
RCM 5% with ITC
|
Hiring out vehicle to a GTA | 0% |
Is a GTA liable to register?
There was a lot of confusions 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 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 20 lakhs).
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 20 lakhs).
Scenarios for Registration for a Goods Transport Agency
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
Service Provider Supplier/ Consignor Receiver of goods/ Consignee Person paying Freight Person liable to pay GST
GTA A company
(Whether or not registered under GST)
Partnership Firm
(Whether or not registered under GST)
Company Company
GTA Partnership Firm
(Whether or not registered under GST)
Registered Dealer X X X
GTA Partnership Firm
(Whether or not registered under GST)
Registered Dealer X Firm Firm
GTA A Co-Op Society Ltd (Whether or not registered under GST) Registered Dealer X X X
GTA A Co-Op Society Ltd (Whether or not registered under GST) Registered Dealer X A Co-Op Society Ltd A Co-Op Society Ltd
GTA Company A Ltd.
(Whether or not registered under GST)
Company B Ltd.
(Whether or not registered under GST)
B Ltd B Ltd
GTA URD
A
Registered Dealer X A X
GTA URD A Registered Dealer X X X
GTA URD A URD F F Exempted**
** GTA services to an unregistered person is exempted as per Notification No. 32/2017- Central Tax (Rate) dated 13th October 2017
Service Provider | Supplier/ Consignor | Receiver of goods/ Consignee | Person paying Freight | Person liable to pay GST |
GTA | A company
(Whether or not registered under GST)
| Partnership Firm
(Whether or not registered under GST)
| Company | Company |
GTA | Partnership Firm
(Whether or not registered under GST)
| Registered Dealer X | X | X |
GTA | Partnership Firm
(Whether or not registered under GST)
| Registered Dealer X | Firm | Firm |
GTA | A Co-Op Society Ltd (Whether or not registered under GST) | Registered Dealer X | X | X |
GTA | A Co-Op Society Ltd (Whether or not registered under GST) | Registered Dealer X | A Co-Op Society Ltd | A Co-Op Society Ltd |
GTA | Company A Ltd.
(Whether or not registered under GST)
| Company B Ltd.
(Whether or not registered under GST)
| B Ltd | B Ltd |
GTA | URD
A
| Registered Dealer X | A | X |
GTA | URD A | Registered Dealer X | X | X |
GTA | URD A | URD F | F | Exempted** |
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