The transportation industry in India plays a vital role in the development of the country’s economy. Being a part of the tertiary sector, it provides support to the primary and secondary sector of the country. Many people choose train or truck for transporting goods, i.e. railways or roadways mode of transportation of the goods. Also, the government of India recently introduced GST on the transport of goods by road.
One significant point here is that taxes on the transportation industry is not new. Taxes were levied on this industry under the previous law as well. The taxes were liable on reverse charge basis where the receiver of the services offered by the GTA (Goods Transport Agency) was liable to pay taxes.
In the GST regime, the same person is responsible for the payment of GST, but the taxation scope is widened.
What is GTA?
Also Read: Train Vs Truck For Transporting Goods
The notification No. 12/2017-Central Tax (Rate) explains GTA as “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”.
The transporter must issue a consignment note to the service provider for it to be considered as a GTA. If the transporter does not issue a consignment note, the provider does not come under the domain of GTA.
What Services of Transportation of Goods are Exempted under GST?
The following services are exempted from GST:
Services by way of transportation of goods by road, except the services offered by a GTA and courier agency.
Services by way of transportation of goods by inland waterways.
What is a Consignment Note?
A consignment note is a document which is issued by the GTA against the receipt of goods (to be transported). As discussed earlier, if the consignment note is not issued, the transporter does not come under the ambit of GTA.
And if the same is issued, the transporter is responsible for the safety of the goods until its delivery to the consignee.
The following are the contents of a consignment note:
- Name of the consignor
- Name of the consignee
- Registration no. of goods carriage (which will transport the goods)
- Details of the goods
- Place of origin
- Place of destination
- The Person liable to pay GST – GTA, consignor, or the consignee
What are the Services offered by a GTA?
The services of the GTA include:
- Transportation of the goods
- Loading and unloading of the goods
- Packing and unpacking of the goods
- Trans-shipment of the goods
- Temporary warehousing of the goods
What is the GST Rate on Transport of Goods by Road?
|Services offered by A GTA||GST Rate|
|When the GTA Carries:
|When carrying goods on which the consideration charged is less than INR 750 (in a single consignee)||0%|
|When carrying goods on which the consideration charged is less than INR 1,500 (in a single consignee)||0%|
|Other goods||5% without ITC*
12% with ITC
|Used household goods for personal use or when transporting goods of unregistered person(s)||0%|
|When transporting goods of the unregistered casual taxable person(s)||0%|
|Transporting goods where GST is paid by the GTA||5% without ITC
12% with ITC
|Transporting goods of 7 specified recipients||RCM** 5% with ITC
12% with ITC (paid by the GTA)
|When hiring out a vehicle to GTA||0%|
*Income Tax Credit
**Reverse Charge Mechanism
Do the GTA have to Register under GST?
Also Read: GST Registration Process
The Notification No. 5/2017 – Central Tax states that a person who only supplies the goods and services on which reverse charge applies does not require GST registration. Thus, a GTA is not required to register under GST if it is transporting goods where the total tax is paid by the recipient under the reverse charge.
Who would pay GST on transportation of goods by road while hiring a GTA?
The recipient of the services offered by the GTA is required to pay GST (under RCM). Noteworthy, if the supplier of the goods will pay the GTA, he is liable to pay the GST. Whereas if the receiver of the goods has to make the payment for the services offered by GTA, he is liable to pay GST.
Businesses Liable to pay GST for the GTA
The following receivers of services (businesses) are required to pay GST on road transport under reverse charge mechanism:
- A factory which is registered under the Factories Act, 1948
- A society registered under the Societies Registration Act (1860) or other law
- A co-operative society
- A person registered under GST
- A corporate body
- A partnership firm
- A casual taxable person
What are the particulars of Invoicing for GTA?
- Name – consignor or consignee
- Details of the goods being transported and the registration number of the vehicle carrying the goods
- The weight of the consignment
- Details of place – origin and destination of the goods
- GSTIN of the person liable for tax – the consignor, consignee, or the GTA
- Name, address, and GSTIN of the GTA
- Tax invoice number
- Date of issue of invoice and description of the services offered
- Value of the supply (taxable)
- Applicable GST rate and the amount of tax
- If GST is payable on RCM
- Supplier’s signature