GST on Good Transport Agency
- GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called
- This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA
- Thus, a consignment note is an essential condition to be considered as a GTA.
Consignment Note Meaning
- A consignment note is a document issued by a goods transportation agency against the receipt of goods for the purpose of transporting the goods by road in a goods carriage.
- If a consignment note is not issued by the transporter, the service provider will not come within the ambit of the goods transport agency.
- If a consignment note is issued, it means that the lien on the goods has been transferred to the transporter. Now the transporter is responsible for the goods till it’s safe delivery to the consignee.
- A consignment note is serially numbered and contains –
- Name of consignor
- Name of consignee
- Registration number of the goods carriage in which the goods are transported
- Details of the goods
- Place of origin
- Place of destination.
- Person liable to pay GST – consignor, consignee, or the GTA.
Services provided by a GTA
The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-
- Loading/unloading
- Packing/ unpacking
- Trans-shipment
- Temporary warehousing etc.
- If these services are included and not provided as independent activities, then they are also covered under GTA.
- If a GTA provides the services to the certain businesses, recipient of services is required to pay GST under reverse charge.
GST Payment Mechanism of GTA options
Option 1 – If GTA is providing services to registered persons where recipients pay GST @ 5% under RCM.
Option 2 – If GTA provides services to registered persons as well as inter-state services to unregistered persons.
- In the case of services to a registered person, the recipient will pay GST @ 5% under RCM.
- In case of inter-state service to an unregistered person, GTA will have to pay GST @5% under FCM without ITC.
Option 3 – If GTA opts to pay GST under FCM and at 12% only. Then GTA will pay GST @ 12% under FCM and avail of the input tax credit.
Option 4 – If GTA opts to pay GST under FCM and at 5% only. Then GTA will pay GST @ 5% under FCM without availing the credit for taxes paid.
Option 5 – If GTA opts to pay GST under FCM but switches between 5% and 12%.
- GTA will pay GST @ 5% under FCM without availing the credit for taxes paid.
- GTA will pay GST @ 12% under FCM by availing the proportionate credit for taxes paid.
Registration is required or not for GTA
A person who is engaged in making only supplies of taxable goods/services on which Reverse Charge Mechanism (RCM) applies is exempted from obtaining registration 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 basis (even if the turnover exceeds the threshold limit).
Businesses are liable to pay GST under reverse charge for a GTA
The following businesses (recipient of services) is required 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
Place of Supply for a GTA
The place of supply of services by way of transportation of goods, including by mail or courier to–– (a) a registered person, shall be the location of such person (b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.
