“Goods Transport Agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called (as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017).
Thus, as above it is clear that for a supplier of service to be a Goods Transport Agency, the issuance of a "Consignment note" is mandatory.
If such a "Consignment note" is not issued by the transporter, he will not come within the ambit of goods transport agency.
“Consignment Note” means a document which is issued by a goods transport agency against the receipt of goods for the purpose of transport by road in a goods carriage. It contains the name of the consignor and consignee, the registration number of the goods carriage in which goods are transported, also contains the place of origin and place of destination etc.
Whether Goods Transport Agency is liable to register under GST-
GTA does not have to register under GST if he is exclusively transporting goods where the total tax is required to be paid by the recipient under reverse charge, as per Notification No. 5/2017- Central Tax dated 19/06/2017 (the threshold limit of Rs. 20 lacs or Rs. 10 lacs (as the case may be) is not applicable to them).
GST paid on reverse charge by the receiver, is eligible for ITC.
Who is liable to pay GST on GTA under reverse charge mechanism-
The following businesses are liable to pay GST under reverse charge -
- 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 GST registered person
- A body corporate established by or under any law; or
- A partnership firm whether registered or not (including AOP)
- Casual taxable person
If payment of freight is made by consignor-
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.
Example 1 – (Freight paid by Registered Dealer)
Mr. X (registered dealer) sold goods to Mr. Y (unregistered dealer), The goods are delivered through M/s Z & Co. (Goods Transport Agency). If the freight is paid by Mr. X, who will be liable to pay GST?
Answer-
Mr. X will be liable to pay GST under reverse charge mechanism.
If payment of freight is made by consignee-
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.
Example 2- (Freight paid by Registered Dealer)
Mr. X (registered dealer) sold goods to Mr. Y (registered dealer), The goods are delivered through M/s Z & Co. (Goods Transport Agency). If the freight is paid by Mr. Y, who will be liable to pay GST?
Answer-
Mr. Y will be liable to pay GST under reverse charge mechanism.
Example 3- (Freight paid by Unregistered Dealer)
Mr. X (registered dealer) sold goods to Mr. Y (unregistered dealer), The goods are delivered through M/s Z & Co. (Goods Transport Agency). If the freight is paid by Mr. Y, who will be liable to pay GST?
Answer-
Mr. X will be liable to pay GST because the material is delivered to Unregistered person (Mr. Y).
GTA services to an unregistered person is exempted as per Notification No. 32/2017- Central Tax (Rate) dated 13th October 2017.
Example 4 - (Freight paid by Unregistered Dealer)
Mr. X (unregistered dealer) sold goods to Mr. Y (unregistered dealer), The goods are delivered through M/s Z & Co. (Goods Transport Agency). If the freight is paid by Mr. Y, who will be liable to pay GST?
Answer-
No one is liable to pay GST because the material is delivered to Unregister person (Mr. Y).
Reverse Charge if the GTA Is Unregistered-
As per Notification No.8/2017-Central Tax (Rate) dated 28th June 2017, If the transport charges (from an unregistered GTA) are less than Rs. 5,000 per day then no GST will be payable.
Example 5-
Mr. X (registered dealer) sold goods to Mr. Y (unregistered dealer), The goods are delivered through M/s Z & Co. (Unregistered Goods Transport Agency). If the freight is paid by Mr. X only of Rs. 4,500 in a day to M/s Z & Co., who will be liable to pay GST?
Answer-
No one is liable to pay GST because the GTA (M/s Z & Co.) is unregistered and the freight amount is below Rs. 5,000 a day.
Example 6-
Mr. X (registered dealer) sold goods to Mr. Y (unregistered dealer), The goods are delivered through M/s Z & Co. (Unregistered Goods Transport Agency). If the freight is paid by Mr. X of Rs. 10,500 in a day to M/s Z & Co., who will be liable to pay GST?
Answer-
Mr. X will be liable to pay GST, while the GTA (M/s Z & Co.) is unregistered and the freight amount is above of Rs. 5,000 a day. So, Mr. X will be liable to pay GST under reverse charge on Rs. 10,500.
GST rate under Goods Transport Agency (GTA)-
Some of the services provided by GTA are exempted while others are taxable.
Exempted category under GST-
The following services are exempted, provided by a GTA by way of transport in a goods carriage of-
- agricultural produce;
- goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
- goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;
- milk, salt and food grain including flour, pulses and rice;
- organic manure
- relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
- defence or military equipment’s
Example 7-
Mr. X (registered dealer) sold goods to Mr. Y (unregistered dealer), The goods are delivered through M/s Z & Co. (Goods Transport Agency) in a single consignment. The freight amount is paid by Mr. X of Rs. 1,300 to M/s Z & Co., who will be liable to pay GST?
Answer-
There is no liability to pay GST, because the amount of freight is below to Rs. 1,500.
Example 8-
Mr. X (registered dealer) sold goods to Mr. Y (unregistered dealer), The goods are booked by Mr. X to M/s Z & Co. (Goods Transport Agency) not in a single consignment. The freight amount is paid by Mr. X of Rs. 600 to M/s Z & Co., who will be liable to pay GST?
Answer-
There is no liability to pay GST, because the amount of freight is below to Rs. 750, material is not booked in a single consignment.
Taxable category under GST-
In respect to taxable services provided by GTA, the rate is as under-
- 5% GST with no ITC claim
- 12% GST with ITC (liable to pay 12% tax on all the services of GTA supplied by it)
If Goods Transport Agency charged GST @ 5%, it will not take credit of GST paid, but if the Goods Transport Agency charged @ 12%, they can take its credit under GST Act. The Goods Transport Agency has no option to charge different rate of tax from parties i.e. from one party @5% or another party @ 12%.
Exemption under GST-
The following services are exempted under GST, by way of transportation of goods-
- By road except for the services of
- a goods transport agency
- a courier agency
- By inland waterways
Thus, transportation of goods by road, if it is a service rendered by goods transport agency is taxable under GST. There are various services which are provided by GTA such as packing, loading, unloading etc.