GST FOR GOODS TRANSPORT AGENCY

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.  As per Explanation to Rule 4B, Service Tax Rules, 1994, a consignment note is a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage. The consignment note  is serially numbered, and contains the names of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods, place of origin and destination, and person liable for paying service tax whether consignor, consignee or the GTA .

The courts held only persons issuing consignment notes are covered within GTA. So, individual truck owners who do not book cargo and issue consignment note in normal course of business are, not GTA and accordingly, services provided by them are not liable to service tax.

Goods Transport Agency under GST

GST will not apply on transport of following goods by a goods transport agency-

1. agricultural produce
2. milk, salt and food grain including flour, pulses and rice
3. organic manure
4. newspaper or magazines registered with the Registrar of Newspapers
5. relief materials meant for victims of natural or man-made disasters
6. defence or military equipment
7. goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500
8. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750

Is a GTA liable to register?

As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is only engaged in making supplies of taxable goods/services, where the total tax on which is liable to be paid on reverse charge basis by the recipient as the category of persons exempted from obtaining registration under GST.

Thus, a GTA does not have to register under GST if he is exclusively transporting goods even if the turnover exceeds 20 lakhs as the total tax is required to be paid by the recipient under reverse charge basis.

Reverse Charge in case of GTA

Normally a service provider is required to pay taxes, but in case a GTA provides the services to the following persons, recipient of services is required to pay GST under reverse charge (notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) :-

1. Factory registered under the Factories Act,1948
2. A society registered under the Societies Registration Act, 1860 or under any other law
3. A co-operative society established under any law
4. A person registered under GST
5. A body corporate established by or under any law; or
6. A partnership firm whether registered or not (including AOP)
7. Casual taxable person

Who will pay under Reverse Charge Basis?

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.

 Note- As per notification Notification No.8/2017-Central Tax (Rate) dated 28th June 2017, intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, is exempted from GST if it does not exceed Rs. 5,000 in a day.

Input Tax Credit

*** Notification No. 11/2017 – Central tax (Rate) dated 28.06.2017 mentions that the restriction of ITC is only on goods or services used in supplying the GTA service.,i.e., they are referring the GTA itself. In case of reverse charge, the person paying tax is the service recipient who is not supplying the GTA service so the concern of using any inputs to supply GTA service does not arise. He is liable to pay GST only because of RCM.

So GST paid on GTA under RCM can be availed as ITC by the person paying the tax.

Place of Supply

The place of supply of services by way of transportation of goods, including by mail or courier to––

(a) a registered person, shall be the location of such person

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

Invoicing for GTA

Any GST compliant invoice of a GTA must have following details-

1. Name of the consignor and the consignee
2. Registration number of goods carriage in which the goods are transported
3. Details of goods transported
4. Gross weight of the consignment
5. Details of place of origin and destination
6. GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency
7. Name, address and GSTIN (if applicable) of the GTA
8. Tax invoice number (it must be generated consecutively and each tax invoice will have 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 (Rates of CGST, SGST, IGST, UTGST and cess clearly mentioned)
13. Amount of tax (With breakup of amounts of CGST, SGST, IGST, UTGST and cess)
14. Whether GST is payable on reverse charge basis
15. Signature of the supplie

Payment of Tax by a GTA

A GTA cannot enjoy any ITC on any of the inputs. So, payment of tax will be only through cash in the normal modes of card/netbanking/cash (only for taxes upto Rs.10,000)

Returns to be Filed by a GTA

If all the services of the GTA fall under RCM then a GTA is not required to register.

If a GTA registers, then it will have to file the normal 3 monthly returns – GSTR-1 (sales), GSTR-2 (purchases-no ITC available) & GSTR-3 (monthly summary & tax liability)

FAQs on GTA

Sumit hired a GTA to transport his goods. The consideration charged was Rs. 1,200.  Will Sumit pay GST?

Sumit will not pay GST under RCM as the consideration for transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500.

Sumit hired a GTA to transport goods. The GTA was asked to come 2 days as Sumit would receive the goods in batches. The entire consideration was Rs. 600. Will Sumit pay GST?

Sumit will not pay GST because the consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750.

Mr. Rohit, a working professional, is moving houses and hires Pundu GTA to transport his household items. Pundu demands Rohit to pay GST under RCM as moving charges are Rs. 6,000. Rohit is confused.

Ans: Rohit is unregistered and if Pundu GTA is also unregistered under GST then, GST is not applicable.

If Pundu is registered, then it will pay GST of 5%. RCM will not apply on Rohit.

Sumit, a garments shop owner in Kolkata, hires a truck to deliver goods from wholesaler to his (Sumit’s) shop. Sumit’s turnover is less than 20 lakhs and he has not registered under GST. The GTA demands that Anand should pay tax under RCM. Anand argues that since he is not registered, he does not have to pay any GST.

Ans: Only the persons above (Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) are required to pay GST under RCM. Unregistered dealers (Sumit) purchasing goods/services from unregistered GTA do not have to pay GST under reverse charge mechanism. If the URD hires from  a registered GTA, then the registered GTA is liable to pay GST.

So, Sumit is not liable to pay GST under RCM.

Sumit now purchases garments from Assam and pays for a truck to deliver the goods to his shop in Kolkata. The GTA says that Sumit has to register for GST as he is making an inter-state purchase as only registered dealers can have inter-state trade.

Ans: An unregistered person can make inter-state purchases. For making inter-state sales, he will have to be compulsorily registered.

Since Sumit is an unregistered dealer and the GTA is also unregistered then the concept of RCM does not arise.

The GTA is registered at Assam and its branch is collecting cash in kolkata on his behalf. Recipient of service Sumit is in kolkata. If Sumit was registered, would he have charged IGST or SGST/CGST under RCM?

If the original transporter in Assam sends the bill to Sumit, then IGST should be charged. If the branch sends the bill then SGST/CGST will apply.

Abhisek has received a one-time contract to sell garments to a dealer in Mumbai. Abhisek hires a truck to send the goods.

Since, Abhisek is not registered under GST, he cannot make any inter-state sale. To make an inter-state sale, he must register as a casual taxable person. Then when he hires a truck to send the garments, automatically he is liable to pay GST under RCM.

Neha decides to voluntarily register. He hires a truck again to transfer goods from the wholesaler to his shop. GTA asks him to pay GST on RCM as he is registered. But Anand’s view is that his turnover is still below 20 lakhs.

Ans: The threshold of turnover does not matter if a person is voluntarily registered. All provisions of GST Act will apply to a registered person. Neha is liable to pay GST under RCM.

Sumit’s turnover has increased to 54 lakhs. He wants to shift to composition scheme as he sells mainly to end consumers. But he is worried as his GTA has told him they would not deliver his goods if he is registered under composition scheme as the GTA become liable for GST.

Ans: This is a myth. Even composition dealers are liable to pay GST under RCM. Sumit will pay GST on RCM if he hires a GTA whether he is registered as a composition dealer or as a normal dealer

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GST rates, Exemptions and Services covered under reverse charge

GST Council finalizes GST rates, exemptions and services covered under reverse charge

Dear Professional Colleague,

The 14th Goods and Services Tax (GST) Council Meeting, chaired by the Union Minister of Finance Shri Arun Jaitley, was held in Srinagar, Jammu and Kashmir. On the first day of the meeting, the Council has broadly approved the GST rates for goods at nil rate, 5%, 12%, 18% and 28%. The Council has also broadly approved the rates of GST Compensation Cess to be levied on certain goods.

On the second day of its meeting, the GST Council finalised the fitment of various services into the GST rate slabs of 0%, 5%, 12%, 18% and 28%. In addition, GST Council has approved a list of services continued to be exempt under GST, the list of services covered under reverse charge mechanism and the new scheme for classification of goods.

Some of the key highlights are:

A.     GST Rates for Goods:

Tax Rate	Product
Nil	Live animal, Milk, curd, lassi, buttermilk, Fresh vegetables, Fresh fruits(other than in frozen state),Cereals(other than bearing a registered brand name), Flour, Aata, Maida, Besan (other than bearing a registered brand name), Pappad and bread(branded or not), Prasadam supplies by religious place, Coconut powder, Water [other than aerated mineral purified distilled),Common Salt, Human blood, Organic manure, Kumkum, sindur, bindi, alta, clinical waste, Plastic bangles, Printed books, Passenger bags.
5%	Yogurt, Fresh fruits in frozen state, Coffee, tea, Vegetable fats and oils, Khandsari sugar, Pizza bread, seviyan, Rusks, Tobacco leaves, Salt other than common salt, Ores and concentrates (e.g. Iron, copper, Nickle, cobalt etc.), Handmade safety matches, Vaccines, Brochures, leaflets, Broomsticks and Muddhas.
12%	Live horses, Frozen meat in unit containers, Butter, ghee and cheese, Dry fruits, Fruit Juice, fruit juice based drinks, Ice and snow, Marble block, granite block, Iodine, Candles, photographic plates and films for x-ray for medical use, Tractors, bicycles, Children’s picture, drawing or colouring books, Fertilizers, fountain pen ink, ball pen ink, Tooth powder, aggarbati, Feeding bottles, Umbrella, Utensils, Tables or kitchen or other household articles, Telephones for cellular networks, Sports goods.
18%	Refined sugar, Pasta, corn flakes, pastries and cakes, Instant tea, tea aroma, Sauces, Soups, Ice cream, Sharbat, Supari, Ethyl alcohol, Vinegar, Hair oil, Soap, Insecticides, rodenticides, herbicides Electric motors and generators, Electronic Toys like tricycles, scooters.
28%	Molasses, Chewing gum, bubble gum and white chocolate, Custard powder, Pan masala, Aerated waters, Marble and granite other than block, Perfumes, beauty or make-up preparations, shampoo, hair cream, Toothpaste, Fireworks, Cars.

B.     Rates for Services:

Tax Rate	Condition	Nature of Service
5%	With ITC of input service	Goods transport by rail, passenger transport by rail (other than sleeper class), Transport of goods in a vessel from place outside India to custom station, Passenger by air in economy class (in normal airport), Passenger by air in regional connectivity scheme airport, Leasing of aircraft(scheduled airlines+ scheduled operation)
	Without ITC	GTA for goods and used household goods, Renting of Motorcab, passengers  transport by AC contract/stage carriage (other than motorcab) and radio taxi, tour operator
	With full ITC	Advertisement in print media, Job work in relation to printing of newspaper
12%	With ITC of Input Service	Foreman of chit fund
	With full ITC	Goods transport in containers by rail by any person other than Indian Railways, Passenger transport by air(other than economy), Restaurant(NON AC+ No license to serve liquor),Hotel(room tariff-Rs 1000 and above but less than 2500 per room per day), Construction service(value of land included)*,Transfer of intellectual property(no right to use) *no refund of overflow of ITC
18%	With full ITC	Restaurant having AC or serving liquor, outdoor catering,Hotel (room tariff more than Rs 2500 above and less than Rs 5000 per room per day), Bundle of food/drinks along with shamiana, pandal, Admission to circus, Indian classical dance,theatre, drama, Composite works contract, All services not specified elsewhere(Residuary entry)
28%	With full ITC	Admission to entertainment/amusement facility, Service by race club, Gambling, AC Restaurant in 5 stars or above-rated hotel, Hotel(room tariff above Rs. 5000 per night per room)
	No ITC	Renting of motor cab(if fuel cost borne by SR)
Same rate of GST & compensation cess as on supply of similar goods	With full ITC	Transfer of right to use goods(for those goods which attract same GST burden &  compensation cess as on sale of goods),Transfer of right in goods or undivided share in goods w/o transfer of title(for those goods which attract same GST burden &  compensation cess as on sale of goods), Transfer of title in goods in which property shall pass at a future dateupon payment of full consideration(value of leasing service shall be included in value of goods supplied)

C.     Services Exempt from GST: Broadly all services presently covered under Negative List and Mega Exemption Notification are kept under the exemption.

D.      

E.     Services covered under RCM (100% reverse charge):

a.     Services imported other than online information and database access and retrieval services provided to non-assessee.

b.     Services provided by GTA to specified persons.

c.     Legal Services provided by advocates to the business entity.

d.     Services provided by the Arbitral tribunal to the business entity.

e.     Sponsorship services provided to the body corporate or partnership firm.

f.      Services (excluding few) provided by the government to the business entity.

g.     Services provided by Director to company or body corporate.

h.     Services provided by the insurance agent to the insurance company.

i.      Services provided by recovery agent to banking company.

j.      Transportation of goods by a vessel from a place outside India up to the customs station of clearance in India provided person located in a non-taxable territory.

k.     Services of transfer or right to use of copyright by author, music composer, photographer, artist etc to publisher, music company, producer.

l.      Radio taxi or Passenger Transport Services provided through electronic commerce operator.

The Council is yet to conclude on the rate of tax on gold and other precious metals, packaged food, textile, cigarettes and footwear.

Hope the information will assist you in your Professional endeavours.

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