Goods Transport Agency Under GST: A Detailed Guide for 2024

Goods Transport Agencies (GTAs) are vital to the economy, facilitating the seamless movement of goods from production to consumption. However, understanding the Goods and Services Tax (GST) implications for GTAs can be complex.

This guide focuses on Goods Transport Agencies (GTAs) and provides a comprehensive overview of how GST applies to their operations, including essential details about exemptions, invoicing, registration, and compliance.

Related Read: GST on Transport Services (Road, Rail, Air and Water)

What is a Goods Transport Agency (GTA)?

A Goods Transport Agency (GTA) is defined as a company that transports goods by road and issues a consignment note. As per the Central Tax (Rate) notification dated 28/06/2017, a GTA essentially arranges the transportation of goods from one location to another.

What is a Consignment Note?

A consignment note is a formal document issued by a Goods Transport Agency (GTA) when they receive goods for transportation by road. It serves as a receipt and proof of the contract between the GTA and the consignor.

The consignment note typically includes details like:

• Unique serial number
• Names of the sender (consignor) and receiver (consignee)
• Vehicle registration details
• Detailed description of the goods
• Origin and destination points
• Information about who is responsible for paying the service tax (consignor, consignee, or GTA)

What are the Services Provided by GTA?

A Goods Transport Agency (GTA) primarily provides road transportation services for goods.

This involves:

• Arranging transportation: Coordinating the movement of goods from the consignor to the consignee.
• Loading and unloading: Handling the physical movement of goods.
• Tracking and tracing: Providing updates on the shipment’s location.
• Insurance (optional): Offering insurance coverage for the goods during transit.
  Customs clearance (optional): Assisting with import/export procedures.
• Issuing consignment notes: Providing a detailed document for each shipment.
• Vehicle management: Ensuring the availability of suitable vehicles for transportation.

Read About: Find Latest GST Rates on Goods and Services in 2024

List of GTA Services with a 0% GST Rate in 2024

Here’s the list of GTA Services with 0% GST Rate

List of GTA Services with a 5% to 18% GST Rate in 2024

Here’s the list of GTA Services with 5% to 18% GST Rate.

What Goods Transportation Services are Exempt from GST?

Transportation of goods via inland waterways or via road is tax-exempt in India except for the services of a courier agency or GTA. For example, goods transportation services provided by a truck driver who does not issue a consignment note is not taxable as the truck driver does not qualify as a GTA. Moreover, the transportation of certain essential goods such as grains, milk, manure, etc. is not taxable under GST.

In addition to that, there are financial thresholds of consideration paid for the transportation of goods, such as Rs 750 or Rs 1500, below which the transportation of goods is tax-exempt.

Read More About: List of Goods and Services Exempt Under GST

What was the situation under Service Tax?

Under the Service Tax regime, 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 (making 30% of the value taxable) for the transportation of general goods.

When does a GTA Need to Register?

GTAs with an annual turnover exceeding ₹20 lakh (or ₹10 lakh for special category states) must register under GST unless their services exclusively fall under the Reverse Charge Mechanism (RCM).

Scenarios Requiring GTA Registration for GST

Who Pays GST When Hiring a GTA?

The responsibility of paying GST on Goods Transport Agency services primarily lies with the recipient of the service under the Reverse Charge Mechanism. This means that the businesses hiring GTAs, such as factories, corporations, and other entities, are liable to pay the GST instead of the GTA itself.

However, if the Goods and Transport Agency opts to pay GST at 12% with ITC, then the GTA pays the tax directly.

Which Businesses Must Pay GST Under Reverse Charge for GTA Services?

The responsibility to pay GST on GTA services provided falls on the recipient if the Goods Transport Agency has not opted to pay central tax at the rate of 6% for road transport services.

According to the notifications issued in 2017, the recipients must be located in a taxable area and belong to one of the following categories:

• A factory registered under the Factories Act, 1948.
• A society registered under the Societies Registration Act, 1860, or any other applicable law in India.
• A co-operative society established under any law.
• A person registered under the CGST, IGST, SGST, or UTGST Acts.
• A corporate entity established under any law.
• A partnership firm, whether registered or not, including associations of persons.
• A casual taxable person.

Who is Responsible for Paying GST Under Reverse Charge?

According to a notification from June 2017, the person who pays for the transportation of goods by road is considered the recipient of the service and must pay GST under the Reverse Charge Mechanism.

1. If the sender pays the freight payment

The sender (consignor) is treated as the recipient of the transportation service. If the sender falls under one of the specified categories, they must pay GST on a reverse charge basis.

2. If the receiver pays the freight payment

The receiver (consignee) is considered the recipient of the transportation service. If the receiver belongs to one of the specified categories, they must pay GST on a reverse charge basis.

Different Scenarios for Determining Who Pays GST for GTA Services

Let’s analyze the different scenarios for determining who pays GST for GTA services:

Reverse Charge Implications if the GTA is Unregistered

According to a notification from June 28, 2017, registered businesses were exempt from paying GST on services or goods they received from unregistered suppliers if the total cost did not exceed ₹5,000 in a day. However, this exemption has been canceled, and now the Reverse Charge Mechanism (RCM) applies only to a specific list of unregistered purchases, which the government will announce later.

Input Tax Credit (ITC) for GTA Services

Input tax credit (ITC) is a crucial aspect of GST on GTA compliance, allowing businesses to claim credit for the taxes paid on inputs used in the course of business. For a Goods Transport Agency, the ITC scenario depends on the rate of GST they opt for.

1. ITC When the GTA Pays GST

If a Goods and Transport Agency chooses the 12% rate, they can avail ITC on the inputs and services used. On the other hand, if the GTA opts for the 5% rate, ITC cannot be claimed. It’s important to note that GTAs have the option to choose either the 5% tax regime or 12% tax regime at the beginning of the financial year.

2. ITC When the Service Receiver Pays GST Under Reverse Charge

When the service receiver pays GST under the Reverse Charge Mechanism (RCM), they can claim Input Tax Credit (ITC) on the tax paid. This allows the service receiver to offset the GST against their tax liability, offering a financial benefit. However, in these cases, the Goods Transport Agency (GTA) itself cannot claim ITC.

How to Invoice for GTA Services?

Creating a GST-compliant invoice is critical for a Goods and Transport Agency.

A typical invoice for GST on GTA should include:

• Name, address, and GSTIN of the GTA
• Date of invoice and unique invoice number
• Details of the consignor and consignee
• Description of the goods transported
• GST rate and amount
• Total amount payable, including GST

These details ensure that the invoice meets all legal requirements and facilitates the smooth processing of GST payments and ITC claims.

How Should a GTA Pay Their Tax?

• Online Payment: Registered GTAs can pay their GST liabilities through the GST portal using methods like net banking, credit/debit cards, or UPI.
• Offline Payment: GTAs can generate a payment challan from the GST portal and pay at authorized banks.

GST Returns that a GTA Must File

GTAs registered under GST must comply with specific return filing requirements.

The primary forms include:

• GSTR-1: Outward supplies statement filed monthly or quarterly
• GSTR-3B: Summary return of all transactions, filed monthly
• GSTR-9: Annual return summarizing the yearly transactions

These filings are crucial for maintaining compliance and ensuring that all tax liabilities are accounted for and paid on time.

Determining the Place of Supply for GTA Services

The place of supply for Goods Transport Agency (GTA) services is crucial for determining the type of GST applicable (CGST, SGST, or IGST). The rules differ depending on whether the recipient is registered or unregistered:

1. Registered Recipients

The place of supply is the location of the recipient. If the recipient is registered under GST, the place of supply is their registered business address. This typically determines whether the transaction is an intra-state (CGST and SGST) or inter-state supply (IGST).

2. Unregistered Recipients

The place of supply is the location where the goods are handed over for transportation. If the recipient is not registered, the place of supply is the place where the GTA picks up the goods. This helps in determining whether CGST and SGST or IGST applies.

Examples for Determining the Place of Supply

Example 1: Registered Dealer (Intra-State Transaction)

• Scenario: A registered dealer in Maharashtra hires a GTA to transport goods from Mumbai to Pune.
• Place of Supply: Maharashtra (location of the registered dealer).
• Applicable GST: CGST and SGST, as the supply is within the same state.

Example 2: Registered Dealer (Inter-State Transaction)

• Scenario: A registered dealer in Karnataka hires a Goods and Transport Agency to transport goods from Bangalore to Chennai.
• Place of Supply: Karnataka (location of the registered dealer).
• Applicable GST: IGST, as the supply is between different states.

Example 3: Unregistered Dealer

• Scenario: An unregistered dealer in Delhi hires a GTA to transport goods from Delhi to Haryana.
• Place of Supply: Delhi (location where the goods are handed over).
• Applicable GST: IGST, as the goods are moving from one state to another, despite the dealer being unregistered.

The Importance of ‘In Relation To’ in the Definition of GTA

The phrase “in relation to” in the definition of a Goods Transport Agency (GTA) means that any service connected to the transportation of goods by road falls under the Goods and Transport Agency category, as long as it is linked to the actual movement of goods. This includes activities like loading, unloading, packing, and unpacking, provided they are directly associated with the transportation.

However, independent services that are not directly tied to the transportation process do not fall under the GTA category. This broad definition ensures that all services integral to the transportation process are treated consistently under GST on GTA.

Conclusion

Navigating GST for Goods Transport Agencies can be complex. This guide simplifies the process by covering key aspects like consignment notes, registration, reverse charge, and invoicing. By understanding these, GTAs can ensure compliance and efficient operations.

Frequently Asked Questions

1. What is the full form of GTA in GST?

GTA stands for Goods Transport Agency under GST.

2. Is GTA eligible for ITC?

Yes, but only if they opt for the 12% GST rate with ITC.

3. Who pays GST while hiring a GTA?

The recipient of the service under the Reverse Charge Mechanism, unless the GTA opts to pay GST at 12%.

4. What exemptions exist for small consignments under GTA services?

Small consignments and goods transported by non-GTA entities may be exempt from GST.

5. What is the limit for GTA for GST registration?

₹20 lakh (₹10 lakh for special category states) in a financial year, with exemptions under certain conditions.

6. Are there any penalties for non-compliance with GST regulations for GTAs?

Yes, penalties can be imposed for late filing, incorrect returns, or failure to comply with GST provisions.