Deepak Gupta | Apr 29, 2018 |
Goods Transport Agency under GST : Applicability of GST on Goods Transport Agencies (GTA) :Transportation of goods by road are done by transporter or courier agency.
However entry no.18 of Notification No. 12/2017 central tax (rate) which notifies the services which are exempted from CGST Act reads as follows
Services by way of transportation of goods
(a) By road except the services of
(i) a goods transportation agency; (ii) a courier agency;
(b) By inland waterways.
GST Advanced Certificate Course in Pendrive
Buy GST Ready Reckoner @ 20% Discount
Analysis of the notification:
The effect of the above notification is as follows
Example1:
Speedy way transporters (not GTA) provided goods transportation services to Ram and co. Here GST will not be applicable because services by way of transportation of goods by road is exempt.
Example2:
Speedy way transporters (GTA) provided goods transportation services to Ram and co. Here GST will be applicable because services by way of transportation of goods by GTA is not in the exemption list.
Key point:The criteria to determine whether GST will be levied on transportation of goods by road is Whether supplier is GTA or not |
Who is GTA
As per entry 9(iii) of Notification No. 11/2017 central tax (rate)
GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
Analysis1 of the notification:
Not only the actual transportation of goods, but other intermediate/ancillary service provided such as-
will also form part of services provided by GTA if not provided as independent activities.
Analysis 2 of the notification:
Example 3:
Speedy way transporters (SWT) provided goods transportation services to Ram and co without issuing any consignment note. There will be no GST because SWT is not treated as GTA because it didnt issued any consignment note.
Example 4:
Speedy way transporters (SWT) provided goods transportation services to Ram and co and issued a consignment note. GST will be applicable because SWT is GTA as it issued consignment note.
Key point:The criteria to determine whether a supplier of transportation services is GTA or not is issuance of consignment note. |
What is consignment note
As per rule 4B of service tax rules, 1994,
Consignment note means a document, issued by a transporter against the receipt of goods for the purpose of transport of goods by road in a goods carriage,
Rate of GST on GTA:
Some of the services provided by GTA are exempted while others are taxable.
Exempted category:
As per entry no. 21 of Notification No. 12/2017- Central tax (rate),
Services provided by a GTA by way of transport in a goods carriage of
are exempted.
Analysis of the notification:
The effect of the above notification is as follows
Example 5:
Consignee | Total freight of all consignments of a consignee | GST |
A | 200 | GST not leviable. |
B | 800 | |
C | 100 | |
D | 150 | |
E | 250 | |
TOTAL | 1500 |
Here consideration charged for single consignee exceeded Rs.750. However Gross amount charged for transportation in single carriage didnt exceed Rs.1500. Therefore GST is not leviable.
Example 6:
Consignee | Total freight of all consignments of a consignee | GST |
A | 700 | GST not leviable |
B | 450 | |
C | 500 | |
D | 750 | |
E | 1000 | GST leviable |
TOTAL | 3400 |
Here gross amount charged for all the consignments exceed Rs. 1500/-, the entire service is not exempt. However, exemption in respect of individual consignments may be claimed if the freight for individual consignment does not exceed 750/-. Hence services provided to consignee would be liable to GST.
Taxable category:
With respect to taxable services provided by GTA, it has the following 2 options:
It means if GTA wants to take credit of GST paid by him then he should collect 12% GST on all the services of GTA supplied by it. Alternatively he can collect 5% GST from his customers provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
However in both of the above cases recipient can avail the credit of tax paid by him.
Note: GTA has to opt to charge either 12% GST rate or 5% GST rate for all his customers. He should not charge 5% for one party and 12% for another party. |
Who is liable to pay GST
In general GST has to be paid by service provider. However entry 1 of Notification No. 13/2017 central tax (Rate) notifies specific categories of supply of services on which tax has to be paid by recipient on reverse charge basis.
Category of supply of services | Supplier of service | Recipient of service |
Transportation of services | GTA | Any factory registered under or governed by the Factories act 1948 |
Any society registered under the Societies Registration Act, 1860 or under any law for time being in force. | ||
Any co-operative society established by or under any law | ||
Any person registered under GST act | ||
Anybody corporate established, by or under any law | ||
any partnership firm whether registered or not under any law including association of persons | ||
any casual taxable person; located in the taxable territory |
For the purpose of the above notification
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 person who receives the service for the purpose of this notification
For clarification:In case, where RCM is applicable then the receiver should pay tax at the rate of 5% only. He is no option to pay tax at 12%. This means if GTA is dealing only with RCM applicable recipients then GTA cannot claim credit of input tax paid by it. |
As per entry 21A of Notification No. 32/2017 central tax (rate), Services provided by GTA to an unregistered person including an unregistered casual taxable person are exempted.
Analysis of the notification:
Example 7:
Ram and co (registered dealer) sold goods worth Rs. 40,000 to a customer (Unregistered). On the request of customer Ram and co delivered goods to his house by using service of speedy way Transporters (GTA). It is agreed between Ram and co and customer that the freight should be paid by Ram and co. In this case Ram and co will become receiver as the freight is paid by them. As he falls in the one of the 7 recipients (registered under GST), GST will be paid by Ram and co under reverse charge mechanism.
However if freight charges are paid by customer then GST will not be levied because service is provided to Unregistered person.
Note: Applicability of GST and RCM in case of GTA depends upon receiver. |
Registration of GTA under GST:
Every supplier will be liable to be register under GST act from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs. 20 lakhs.
However as per Notification No. 5/2017- Central Tax dated, a person who is engaged in making only supplies of taxable goods/services on whichreverse charge applies is exempted from obtaining registration under GST.
It means If GTA provides services only to those 7 recipients who are liable to pay tax under reverse charge then GTA is not required to register under GST act.
Key point: However if GTA opts for paying tax under 12% then GTA has to mandatorily register under GST. |
Place of supply of GTA services:
As per CGST Act, the place of supply of services by way of transportation of goods, including by mail or courier to,
Example8:
Ram and co (registered person in Chennai) hired speedy way transporters (registered in Delhi) to deliver some goods from Delhi to Chennai. As the recipient is registered person the place of supply is the location of Ram and co i.e. Tamilnadu. (IGST will be applicable)
Example9:
Ram and co of Chennai (unregistered person) hired speedy way transporters (registered in Delhi) to deliver some goods from Delhi to Chennai which were purchased by Ram and co from a registered dealer in Delhi. As the recipient is unregistered person the place of supply is the location at which such goods are handed over for their transportation. It means the place of supply is Delhi (CGST and SGST will be applicable)
(However it is to be noted that in the above example, GST will not apply as the recipient is unregistered)
Time of supply of GTA services:
There are separate Time of supply provisions for Forward charge and reverse charge under GST.
1 . Time of supply of GTA in case of Forward charge:
TOS shall be the earliest of following dates
2. Time of supply of GTA in case of Reverse charge:
TOS shall be the earliest of following dates
Example 10:
Speedy way transporters who charges 12% GST on services provided by them provided GTA services to Ram and co (registered under GST) on 14-04-2018. Invoice issued on 24-4-2018. Payment made by Ram and co on the next day of issuing invoice.
The following points are to be considered here:
Considering the above points, Time of supply is earlier of 24-04-2018 or 25-04-2018(because invoice is raised before 30 days of provision of service). Therefore TOS is 24-04-2018.
Example 11:
Speedy way transporters provided GTA services to Ram and co (Unregistered partnership firm) on 14-4-2018. Invoice raised on 15-4-2018. However payment was made by Ram and co on 14-6-2018.
The following points are to be considered here:
As per the provisions, TOS is 13-06-2018.
Invoicing in case of GTA:
Apart from the particulars which are to be included in Tax invoice, the following particulars should be mandatorily present in an invoice or on any other document issued by GTA.
Mandatory particulars:
Returns to be filed:
In case GTA is registered then it has to file 3monthly returns. They are as follows
Conclusion:
Keeping in view that the transportation services are very necessary for smooth going of business, only services provided by GTA and courier agency are brought into tax net in GST.
About the Author : This article has been written byJ.Prudhvi. The author can be reached at[email protected].
Tags :Services of Goods Transportation Agency in GST regime,Taxability of Services of Goods Transportation Agency in GST regime, Taxability of GTA services, Rates of GTA services, Reverse charge mechanism on GTA, Place of supply of GTA Services,Time of supply of GTA Services,gst on gta reverse charge,gst rate on gta service, itc on gta under gst,gst rate for transporters,gst rate on transport,gst on freight in invoice,gst on transport of goods by road,gst rate on freight charges, GTA Services under GST, Goods Transport Agency under GST,Goods Transport Agency under GST : Applicability of GST on Goods Transport Agencies (GTA),Goods Transport Agency under GST : Applicability of GST on Goods Transport Agencies (GTA)
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"