Goods Transport Agency under GST

Goods Transportation Under GST

Roadways are one of the most popular forms of goods transport in India. As per the National Highways Authority of India (NHAI) roads contribute about 65% freight and 80% passenger traffic.

Transportation of goods by road is done by a transporter or courier agency. This article talks about the transporter, i.e., the GTA.

What Service of Transportation of Goods is Exempt Under GST?

Transportation of goods is exempt from GST when done by road, except for services provided by:

• Goods Transport Agencies (GTA)
• Courier agencies
• Inland waterways

Therefore, transporting goods by road remains exempt from GST, with GST applying only to Goods Transport Agencies (GTA).

What is a Goods Transport Agency Under GST?

A Goods Transport Agency or GTA under GST means any person who provides service related to the transport of goods by road and issues consignment notes by whatever name is called. While others can also hire vehicles for goods transportation, only those issuing a consignment note are considered as GTA. Thus, a consignment note is an important condition that needs to be considered for GTA.

What is a Consignment Note?

A consignment note is a document issued by a goods transport agency when they receive goods for transport by road in a goods carriage. If the transporter does not issue a consignment note, they are not classified as a goods transport agency.

When a consignment note is issued, the transporter takes responsibility for the goods, as the lien is transferred to them. They are accountable for the safe delivery of the goods to the consignee.

A consignment note, which is numbered in sequence, includes:

• Name of the consignor
• Name of the consignee
• Registration number of the carriage of the goods
• Details of the goods
• Place of origin
• Place of destination
• The person responsible for paying GST (consignor, consignee, or the GTA).

What are the Servies Provided by a Goods Transport Agency?

The service covers not just the actual transportation of goods but also includes related services such as:

• Loading and unloading
• Packing and unpacking
• Trans-shipment
• Temporary warehousing

If these services are part of the overall transportation and not provided as separate activities, they are also covered under the scope of a goods transport agency (GTA).

What was the Case Under Service Tax?

Under the Service Tax laws, the Reverse Charge Mechanism (RCM) was also applicable. There was a 60% abatement (making 40% of the value taxable) for the transportation of used household goods and a 70% abatement (leaving 30% taxable) for the transportation of regular goods.

What is the GST Rate on GTA?

Is a GTA Required to Register Under GST?

There was significant confusion regarding whether a Goods Transport Agency (GTA) needs to register under GST. Any person providing only taxable goods or services that fall under the Reverse Charge Mechanism (RCM) is exempt from registering under GST.

Therefore, a GTA is not required to register under GST if they exclusively transport goods where the tax is paid by the recipient under the reverse charge, even if their turnover exceeds the threshold limit.

Additionally, if a GTA is GST-registered, you can verify the authenticity of their GSTIN using the GST search tool.

When is a Goods Transport Agency Required to Register Under GST?

Note: The GST registration threshold for goods suppliers has been increased to Rs. 40 lakhs.

Who Pays GST While Booking of Goods to Transport Agency Under GST?

When a Goods Transport Agency (GTA) provides services to certain businesses, the recipient of those services is responsible for paying GST under the Reverse Charge Mechanism (RCM). This means the liability to pay GST shifts from the GTA to the service recipient.

Which Businesses Have to Pay GST Under Reverse Charge Mechanism for a GTA?

The following businesses (recipients of services) are required to pay GST under the Reverse Charge Mechanism when receiving services from a GTA:

• Factories registered under the Factories Act, 1948
• Societies registered under the Societies Registration Act, 1860 or any other law
• Co-operative societies established under any law
• GST-registered persons
• Bodies corporate established by or under any law
• Partnership firms, whether registered or not (including Associations of Persons or AOPs)
• Casual taxable persons

Who Pays Under Reverse Charge?

A person who pays or is liable to pay freight for the transportation of goods by road in goods carriage and is located in a taxable territory shall be treated as the receiver of service.

Payment by Sender
If the supplier of goods (consignor) pays the Goods Transport Agency (GTA), the consignor will be considered the recipient of the service. If the consignor falls under one of the specified categories (such as a factory, registered society, GST-registered person, etc.), they will be responsible for paying GST on a reverse charge basis.

Payment by Receiver
If the liability for freight payment lies with the receiver (consignee), then the consignee will be considered the recipient of the transportation services. If the consignee falls into any of the specified categories (such as a factory, registered society, GST-registered person, etc.), they will be responsible for paying GST under the reverse charge mechanism.

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

Input Tax Credit

If GTA Pays GST -
GTA can pay either 12% GST with ITC or pay 5% GST without ITC.
However, the GTA has to pay GST at the beginning of the Financial year.

If Service Receiver Pays GST Under RCM
Service receivers can always avail of Input Tax Credit (ITC) on the GST paid under the Reverse Charge Mechanism (RCM). However, the Goods Transport Agency (GTA) cannot claim ITC in GST paid under the reverse charge mechanism.

Invoicing for GTA
A GST-compliant invoice issued by a Goods Transport Agency (GTA) must include the following details:

1. Name of the consignor and consignee
2. Registration number of the carriage of the goods in which the goods are transported
3. Details of the goods transported
4. The gross weight of the consignment
5. Details of the place of origin and destination
6. GSTIN of the person liable for paying tax (whether consignor, consignee, or goods transport agency)
7. Name, address, and GSTIN (if applicable) of the GTA
8. Tax invoice number (must be generated consecutively, with each invoice having a unique number for that financial year)
9. Date of issue
10. Description of service
11. Taxable value of supply
12. Applicable rate of GST (with clear mention of CGST, SGST, IGST, UTGST, and cess rates)
13. Amount of tax (with a breakup of CGST, SGST, IGST, UTGST, and cess amounts)
14. Indication of whether GST is payable on a reverse charge basis
15. Signature of the supplier

Returns to be Filed by a GTA

If all the services provided by a Goods Transport Agency (GTA) fall under the Reverse Charge Mechanism (RCM), then the GTA is not required to register under GST. However, if a GTA chooses to register, it must file the following returns:

1. GSTR-1: Sales return
2. GSTR-3B: Summary and tax liability return

These returns can be filed either monthly or quarterly, along with one annual return in the form of GSTR-9.

How to Determine Place of Supply for a GTA?

The place of supply for services related to the transportation of goods, including those provided by mail or courier, is determined as follows:

• (a) For a registered person, the place of supply is the location of that person.
• (b) For a person other than a registered person, the place of supply is the location where the goods are handed over for transportation.

Understanding GST implications for Goods Transport Agencies can be complicated, especially for small business owners who lack the knowledge of taxes.

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