Goods Transport Agency (GTA) under Goods and Services Tax (GST)
1. Who is GTA?
GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
2. What are the rates of GST for GTA?
GTA have the option to charge GST at the rate of 2.5% or 6% CGST (equivalent SGST and 5%, 12% IGST). The GST rates are dependable on taking credit of input tax.
The HSN Classification is as follows:
Heading 9965 – Services of Goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use)
· GST Rate 2.5% - Provided that credit of input tax charged on goods and services used in supplying services are not taken by GTA.
· GST Rate 6% - Provided that the goods transport agency opting to pay tax @ 6% shall thenceforth be liable to pay tax @ 6% on all the services of GTA supplied by it.
3. Importance of Consignment Note?
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.
Issuance of a consignment note is the sine-qua-non for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GTA. If a consignment note is issued, it indicates that the lien on the goods has been transferred to the transporter and the transporter becomes responsible for the goods till it’s safe delivery to the consignee.
4. Explain Reverse charge mechanism (RCM) for GTA?
Reverse charge means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of goods or services or both.
RCM for GTA services:
Supply of Services by a goods transport agency (GTA) who has not paid tax at the rate of 6%, in respect of transportation of goods by road to –
Thus, the recipient of services has to discharge GST at concessional rate of 2.5% CGST.
Note: 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 i.e. service recipient.
5. What is GST Rates under forward charge mechanism and reverse charge mechanism for GTA?
Forward charge mechanism – GST @ 6% CGST
Reverse charge mechanism – GST @ 2.5% CGST (to be paid by service recipient)
6. What are exemptions available to GTA?
Services provided by a GTA, by way of transport in a goods carriage of:
Services by way of giving on hire to GTA, a means of transportation of goods. Thus, if the GTA hires a means of transportation of goods, no GST is payable on such transactions.
7. Are intermediary and ancillary services to be treated as part of the GTA service?
GTA provides service to a person in relation to transportation of goods by road in a goods carriage, which is a composite service. Intermediary and ancillary services may include various services such as loading/unloading, packing/unpacking, transshipment and temporary warehousing, which are provided in the course of transport of goods by road. These services are not provided as independent services but as ancillary to the principal service, namely, transportation of goods by road. The invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services.
In view of this, if any intermediary and ancillary service is provided in relation to transportation of goods by road, and charges, if any, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply. In fact, any service provided along with the GTA service that is part of the composite service of GTA shall be taxed along with GTA service and not as separate supplies.
However, if such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies.
8. What is place of supply for GTA services?
If services provided to a registered person, place of supply will be location of such person.
If services provided to a person other than a registered person, place of supply will be location at which such goods are handed over for their transportation.
However, where the location of supplier of services or the location of recipient of services is outside India, place of supply of services of transportation of goods by GTA shall be the place of destination of such goods.
9. What are records and accounts to be maintained by GTA?
Every transporter shall maintain records of the consigner, consignee and other relevant details of the goods in prescribed manner. Person engaged in the business of transporting goods shall maintain records of goods transported, delivered and goods stored in transit by him along with the GSTIN of the registered consigner and consignee for each of his branches.
CA. Saket Agarwal
Partner - Indirect Taxation