GST on Goods Transport Agency (GTA) or GTA under GST
Goods Transport Agency (GTA) is always a debatable issue under GST as some transactions of GTA are exempt, some are liable to Reverse Charge (RCM) and some transactions are chargeable at 5% and other are at 12%. In this article we will discuss about following aspect of GTA (GTA under GST):
- What is Goods Transport Agency (GTA)
- Applicability of Reverse Charge Mechanism for GTA
- Cases where registration under GST is mandatory for GTA
- How to determine Place of Supply in case of GTA services
- What is applicable GST rate on GTA and Exemptions
Definition of Goods Transport Agency (GTA):
Goods Transport Agency or GTA is not defined under GST Act. However under previous indirect tax regime GTA was defined which are as follows:
Section 65B (26) of the Finance Act, 1994 defined Goods Transport Agency(GTA) as “any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called”.
Rule 4B of Service Tax Rules, 1994 defined consignment note as “consignment note means 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, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency”
Hence there are two basic conditions which need to be satisfied to classify as GTA:
- Any service provider rendering transportation of goods services through Road And
- Issues Consignment note
Point here to be noted that if transporter providing “goods transportation services” through road but not issuing any documents containing all the basic details of consignment note, will not be treated as GTA.
Reverse Charge Mechanism for GTA:
Generally services provided by GTA fall under reverse charge. If services are provided to below mention “specified category of persons” by GTA then reverse charge mechanism will apply and GTA will not be required to collect tax from such recipient of services. Here is list of all those specified persons:
- 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 person registered under GST
- A body corporate established by or under any law; or
- A partnership firm whether registered or not (including AOP)
Hence if GTA is providing services to any person who doesn’t falls in above specified list then GTA is required to collect tax from recipient of services and will pay to the government under forward charge. In other words we can say if GTA is providing services to unregistered individual then GTA will collect tax from recipient and remit it to government.
Registration requirement for GTA:
If GTA is providing services only to “specified persons” (as explained above) then GTA is not require to get register under GST. However if GTA is providing services to “specified person and to others” or to persons other than specified person than GTA will be required to take registration.
Further if GTA does not have turnover more than 20Lakh/10Lakh the GTA is not required to obtain GST Registration.
Place of supply (POS) in case of GTA:
Place of supply is one of the essential factor to decide whether transaction is interstate supply or intrastate supply. As per section 12(8) of IGST Act, 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 registered person
(b) A person other than a registered person, shall be the location at which such goods are handed over for their transportation i.e. business place of transporter where goods handed over for transportation
Hence if recipient is registered person then place of supply (POS) will be the place for which recipient obtained GSTIN and if recipient is not registered than POS will be the location at which such goods are handed over for further transportation.
Let’s understand this with help of an example:
“A” procured some goods from Noida for his factory in Delhi and availed GTA services from “B” who is registered in Haryana. In that case A & B both are registered person in respective state and place of supply will Delhi as A is registered person in Delhi.
In above example, if A is unregistered party then place of supply will the place where goods are actually handed over for their transportation i.e. Noida. Here location of recipient of services will not be considered while determining place of supply.
Applicable GST Rate and Exemptions:
As per Notification no. 11/2017-Central Tax (Rate) as amended by Notification no. 20/2017-Central tax (Rate), if services provided by GTA does not fall under RCM the GTA can opt any option out of two options which are as follows:
- Pay taxes at 5% (IGST or CGST plus SGST/UGST) without claiming input tax on inward supplies
- Pay taxes at 12% (IGST or CGST plus SGST/UGST) and can claim input credit
Further this option is available only to GTA hence if tax to be paid by recipient under RCM then they has to pay tax at 5% and input credit will also be available. Any recipient paying taxes under RCM can avail input tax credit subject to section 17 of CGST Act.
1) Exemptions available on the basis of nature of goods:
Following services are exempt if provided by GTA:
(a) Agricultural produce;
(b) Milk, salt and food grain including flour, pulses and rice;
(c) Organic manure;
(d) Newspaper or magazines registered with the Registrar of Newspapers;
(e) Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(f) Defence or military equipment
2) Exemptions available on the basis of monetary limit:
If goods are carried in vehicle and overcall consideration charged by GTA from single or multiple recipient of services does not exceeds 1500/- in totality.
If goods are carried in vehicle and consideration charge against each consignment is less than 750/-
3) Exemptions available on the basis of type of service provider
Serial No. 18 of Notification no. 12/2017 of Central Tax Rate, exempt the services as:
Services by way of transportation of goods:
(a) By road excepts the services of:
(i) By Goods transportation agency;
(ii) By Courier agency;
(b) By inland waterways.
In other words, if any person is providing road transport services that is not GTA (i.e. not issuing consignment note) and courier agency then such services are exempt from tax. In other words we can say services provided by any person other than GTA & Courier Agency are exempt from GST. Read Comprehensive and Simplified TDS Rate Chart for FY 2020-21 at http://shorturl.at/tIX09
As we everyone knows that major portion of GTA services is being managed by unorganized sector and the workers involved in this sector is also from lower background of country, considering the organizational structure, government don’t want to impose any compliance burden on GTA hence government given relaxation from registration & tax collection in many cases which we have explained above.