Goods Transport Agency (GTA)
Services under GST / RCM on GTA Services
By Yogesh Verma (CS/LLB) / 2 min read / GST Article
Introduction: Goods Transport Agency (GTA) plays a pivotal role in the
logistics and supply chain sector by offering transportation of goods by road.
Under GST law, specific rules govern the taxation, exemptions, and compliance
requirements for GTA services. This article delves into the key aspects of GTA
services, including definitions, tax applicability, exemptions, and place of
supply provisions, offering a comprehensive understanding of the subject.
Definition of Goods
Transport Agency
As per Clause (Ze) of Notification No. 12/2017 – Central Tax
(Rate), a Goods Transport Agency refers to “any person who provides services in
relation to the transport of goods by road and issues a consignment note, by
whatever name called.”
To qualify as a GTA, the following conditions must be met:
1.
The entity can be any person or
business.
2.
It must be engaged in the business
of transporting goods by road.
3.
It should issue a consignment note.
What is a Consignment
Note?
Though GST law does not define a consignment note, the
Service Tax Rules of 1994 provide clarity. A consignment note is a document
issued by a GTA upon receiving goods for transport. This document:
- Is
serially numbered.
- Includes
the names of the consignor and consignee.
- Mentions
the registration number of the goods carriage.
- Details
the goods transported.
- Specifies
the place of origin and destination.
- Identifies
the person liable for paying tax.
A consignment note is pivotal as its issuance distinguishes
GTA services from those of individual transporters.
Taxability of GTA
Services under GST
The taxation of GTA services can occur under two mechanisms:
1.
Forward
Charge Mechanism (FCM):
o If a GTA opts for FCM, it can charge and collect GST at:
§ 12% with eligibility to claim Input Tax Credit (ITC).
§ 5% without the eligibility to claim ITC on services used to
provide GTA services.
2.
Reverse
Charge Mechanism (RCM):
o Under RCM, the GTA does not collect tax from the recipient.
Instead, the recipient discharges GST at a rate of 5%.
Exemptions for GTA
Services
Section 11 of the GST Act empowers the government to exempt
specific goods and services from GST through notifications. Notification No.
12/2017 – CT(R) provides various exemptions applicable to GTA services:
1.
Services
by Individual Truck Operators:
o Transport services provided by entities other than GTAs or
courier agencies are exempt. For instance, individual transporters or tempo
operators who do not issue consignment notes are exempt from GST, and
recipients availing these services do not pay tax under RCM.
2.
Transport
of Specific Goods:
o GTA services are exempt when transporting the following:
§ Agricultural produce.
§ Milk, salt, and food grains (including flour, pulses, and
rice).
§ Organic manure.
§ Registered newspapers or magazines.
§ Relief materials for disaster victims.
§ Defense or military equipment.
3.
Threshold-Based
Exemption:
o Until July 17, 2022, services for transporting goods were
exempt when:
§ The consideration for a single consignment did not exceed
₹1,500.
§ The consideration for goods transported for a single
consignee did not exceed ₹750.
o This exemption was removed effective July 18, 2022, by
Notification No. 04/2022 CT(R).
4.
Hiring of
Vehicles by GTA:
o Services involving the hiring of vehicles to a GTA are
exempt under Entry No. 22(b) of Notification No. 12/2017. This exemption
extends to vehicles hired by one GTA from another GTA.
Composite Supply and
Additional Charges
GTAs often provide ancillary services, such as loading and
unloading, along with transportation. These services are considered a composite
supply under GST, where the principal supply is transportation. Thus, the
entire transaction, including loading/unloading charges, is taxed at the same
rate as transportation services and falls under RCM.
Place of Supply Rules
for GTA Services
The place of supply determines the applicable GST for GTA
services. Sections 12 and 13 of the Integrated Goods and Services Tax (IGST)
Act govern these provisions:
1.
Location
of Supplier and Recipient in India (Section 12):
o If the recipient is registered under GST, the place of
supply is the recipient’s location.
o For unregistered recipients, the place of supply is:
§ The location of the recipient, if an address is available.
§ The location of the supplier in other cases.
2.
Supplier
or Recipient Located Outside India (Section 13):
o The place of supply is the recipient’s location.
Illustrative Scenarios:
|
Location of GTA
|
Location of Recipient
|
Registration Status
|
Place of Supply
|
GST Levy
|
|
Jaipur
|
Jaipur
|
Registered
|
Jaipur
|
CGST + SGST
|
|
Chennai
|
Jaipur
|
Registered
|
Jaipur
|
IGST
|
|
Chennai
|
Jaipur
|
Unregistered
|
Chennai
|
CGST + SGST
|
|
Hyderabad
|
Cochin
|
Unregistered
|
Hyderabad
|
CGST + SGST
|
|
Mumbai
|
Bangladesh
|
Registered
|
Mumbai
|
CGST + SGST
|
|
Mumbai
|
China
|
Unregistered
|
China
|
Zero-Rated Supply
|
Changes Introduced by Finance Bill
2023
The Finance Bill 2023 introduced two significant amendments
to the IGST Act:
1.
Omission of the proviso in Section
12(8).
2.
Removal of sub-section (9) from Section
13.
These changes streamline the determination of the place of
supply for GTA services.
Conclusion: Goods Transport Agency services form an integral part of
India’s economic framework. The GST law provides clarity on their taxation,
offering flexibility through forward and reverse charge mechanisms while
granting exemptions for specific scenarios. By understanding these provisions,
businesses can ensure compliance and optimize their tax liabilities. For GTAs,
compliance with consignment note requirements and other GST norms is essential
for availing benefits and avoiding penalties. Through continued updates like
the Finance Bill 2023, GST law evolves to meet the dynamic needs of the
logistics sector
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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