GST Vidhi | GST Articles

GST Exemption on Services by Individual Truck Owners to GTA and Hiring of Transport Vehicles: Explained Simply

Introduction: The transport industry is the backbone of goods movement across India. Trucks, lorries, and heavy vehicles carry materials every day to various destinations. While some services are provided by organized logistics companies, many are offered by individual truck owners or small fleet operators.

When GST was introduced, a major concern was whether such individual service providers would be taxed. This led to confusion, especially when these individuals offered their vehicles to larger transport companies known as Goods Transport Agencies (GTAs).

To bring clarity, the Government issued specific notifications and exemptions. This article explains, in simple terms, the GST treatment of services by individual truck owners to GTAs, especially in the form of hiring of trucks for transporting goods.

What is a Goods Transport Agency (GTA)?

Under GST, a Goods Transport Agency (GTA) is defined as:

“Any person who provides service in relation to transport of goods by road and issues a consignment note.”

The issuing of a consignment note is the key factor that makes a service provider a GTA. GTAs generally:

• Accept goods from clients
• Issue consignment notes
• Undertake responsibility for safe delivery
• Have a network of trucks, either owned or hired

So, GTAs can also hire trucks from individual truck owners to complete deliveries. This is where GST implications come into play.

Who is an Individual Truck Owner?

An individual truck owner is a person who owns one or more trucks and offers them for:

• Direct transportation of goods for customers, or
• Hiring to transport companies (like GTAs)

They may or may not operate under a business name and usually do not issue consignment notes. They simply offer the vehicle and, in some cases, a driver for carrying goods.

GST on Direct Services by Individual Truck Owners (Without Consignment Note)

As per Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017:

Services by way of transport of goods by road are exempt from GST if provided by a person other than a GTA or courier agency.

This means that if an individual truck owner directly provides goods transport service to a customer without issuing a consignment note, then:

• He is not considered a GTA
• The service is exempt from GST

Example:

Mr. Ram owns a single truck. A rice trader hires his truck to transport bags of rice from a warehouse to a wholesaler. Mr. Ram:

• Charges ₹5,000
• Does not issue a consignment note

➡ This service is not taxable under GST.

Now, What Happens When a Truck Owner Gives His Truck to a GTA?

Here comes the real point of discussion.

Let’s say an individual truck owner does not deal directly with the end customer, but instead hires out his truck to a GTA, like a logistics company.

In this case, is GST applicable on such hiring service?

➤ Answer: NO – It is exempt.

This is clarified under the same Notification No. 12/2017-Central Tax (Rate), Entry No. 22(b), which says:

“Services by way of giving on hire to a goods transport agency, a means of transportation of goods, are exempt from GST.”

Understanding "Hiring of Means of Transport" to a GTA

Let’s break this down:

• Hiring of means of transport = Renting out trucks, lorries, or similar goods vehicles
• Without transfer of ownership or permanent possession
• For transporting goods, not passengers or racing

If the truck is given on hire to a GTA, and used for transportation of goods, then this is not a taxable supply under GST.

The recipient (GTA) is using the truck to render its own GTA service (for which it may issue a consignment note and pay GST), but the supplier (individual truck owner) is not liable to charge GST for just hiring the truck.

Practical Examples

🔸 Example 1: Individual Truck Owner Hiring to GTA

Mr. Shyam owns a truck. He gives his truck on hire to M/s FastMove Transport Pvt. Ltd., a registered GTA.

• M/s FastMove issues consignment notes to its clients
• Mr. Shyam only provides the vehicle (with or without a driver)
• He charges ₹15,000 for using the truck for 3 days

➡ As per Notification 12/2017, this is exempt from GST.

🔸 Example 2: Truck Hired for Office or Personal Use

If the truck is given on hire to a company not for transporting goods, but for moving office equipment or for personal use:

➡ The exemption does not apply.

➡ GST may be applicable based on the nature of the contract.

Conditions for GST Exemption on Hiring Trucks to GTA

To claim exemption from GST when hiring trucks to GTA, the following must be ensured:

What if the Truck Owner is Registered Under GST?

Even if the truck owner has taken GST registration, the exemption is still available for eligible services.

The exemptions under Notification 12/2017 apply to type of service, not to the registration status of the provider.

However, the truck owner must:

• Properly classify the supply as “exempt”
• Report it in GSTR-1 and GSTR-3B (if registered) under exempt supplies

Should Truck Owners Issue Consignment Notes?

No. If an individual truck owner issues a consignment note, they are automatically treated as a GTA, and GST becomes applicable on their services.

To remain exempt, they must not issue consignment notes.

Misconception – If I Provide to a Company, GST is Always Applicable

That’s not true. The key point is:

• If you're hiring out your truck to a GTA → Exempt
• If you're transporting goods directly without consignment note → Exempt
• If you're acting as a GTA (issuing consignment note) → GST applicable

So, GST does not depend on whether the customer is a company, but rather how the service is structured.

What Documents Should Truck Owners Keep?

Even though the supply is exempt, individual truck owners should maintain basic records such as:

• Truck hire agreement/invoice
• Copy of the vehicle registration
• PAN and bank details
• Confirmation that no consignment note was issued
• A declaration (if needed) that the vehicle was used for goods transport by the GTA

This helps defend the exemption in case of scrutiny by the GST department.

Conclusion

GST law provides a very clear exemption for individual truck owners who provide their vehicles on hire to GTAs. This was done to:

• Support small operators
• Reduce tax burden
• Keep the logistics chain efficient

So long as the truck owner:

• Does not issue a consignment note, and
• Provides vehicle to a GTA for transporting goods

➡ The service is fully exempt from GST.

Understanding these rules can help small transporters avoid confusion, unnecessary tax payments, and compliance burdens. GTAs must also ensure that they do not wrongly deduct TDS or insist on GST from exempt truck operators.

Disclaimer: All the Information is based on the notification, circular advisory 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.