The applicability of GST on GTA depends on the specific circumstances of each case. Generally, GTA services are considered taxable under GST. However, there are certain exemptions and exclusions that may apply. For example, GTA services provided by an individual or a Hindu Undivided Family (HUF) with a total annual turnover of less than Rs. 40 lakhs (Rs. 10 lakhs for certain states in the northeast and hilly areas) are exempt from GST. Additionally, GST is not applicable on GTA services provided to the government, a local authority, or a statutory body.
APPLICABILITY OF GST ON GOODS TRANSPORT AGENCY
Transportation is a vital part of the economy as any problem in transportation disrupts the entire business channel. This is why any petrol price change has a far-reaching effect in disruption of business.
In India, the most popular form of transport is via road.
There are Three type of persons who are engaged in the transport of Goods by Road.
- Normal Transporter (Who does not issue Consignment Note).
- Goods Transport Agencies (Who are issue Consignment Notes).
- Courier Agency.
WHAT IS THE GTA?
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017, “Goods transport agency” means any person who provides service in relation to the transport of goods by road and issues consignment note, by whatever name called. From the analysis of the meaning of GTA, It can be said that only those persons are covered in GTA who are issue Consignment Notes, while others are exempted from GST and hence consignment note is an essential condition to qualify as GTA.
WHAT IS A CONSIGNMENT NOTE?
A consignment note is a document issued by a goods transport agency against the receipt of goods for the purpose of transporting the goods by road in a goods carriage. 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 its safe delivery to the consignee.
SALIENT FEATURE OF CONSIGNMENT
- It should be serially numbered
- Date of transportation of goods.
- Name of consignor.
- Name of consignee.
- Details of goods.
- Place of origin.
- Place of destination.
- Person liable to Pay GST-i.e. Consignor or Consignee or GTA.
- Registration number of Vehicle.
I. Changes applicable to GTA paying GST under Forward Charge
1. Option to pay GST @5% under Forward Charge (Without ITC)
Currently, GST is applicable on GTA services either at 5% under RCM or 12% with ITC under FCM under CGST Notification (Rate) No. 11/2017 dated 28.06.2017.
Now, GTA Service Providers have been given the option to pay GST @5% without ITC. Now, w.e.f. 18th July 2022, the following options are available to GTA Service Providers for the transportation of goods (including used household goods for personal use) –
2. Mandatory Declaration by GTA to its jurisdictional officer for opting for Forward Charge
Where GTA opts to pay GST under forward charge during a financial year, it shall have to give a declaration as specified in Annexure V (Form appended at end of the document) on or before 15th March of the preceding financial year, i.e., say for F.Y. 23-24 such declaration needs to be given on or before 15.03.2023.
3. Mandatory Declaration in invoice
If GTA opts to pay GST under forward charge, then supplier shall issue a tax invoice to the recipient at the applicable rate and shall give following declaration as prescribed in Annexure III of the Notification No. 05/2022-CentraI Tax (Rate) dated 13.07.2022. Such declaration is reproduced below for ready reference.
“Declaration
I/we have taken registration under the CGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year _________ under forwarding charge.’’
II. Other Changes related to GST on Transport Sector (GTA)
1. Classification of GTA services under 9965
Relevant changes have been made in CGST Notification (Rate) No. 11/2017 dated 28.06.2017. to avoid the confusion in classification of GTA Service whether under HSN 9965 or 9967. Now, GTA services shall be classified under SAC 9965 only, whereas ‘Support services in transport’ shall be classified under SAC 9967. An explanation has been inserted in SAC 9967 to clarify the same – “This entry does not include goods transport service involving Goods Transport Agency (GTA) service, which falls under Heading 9965’’. It is now mandatory to follow HSN 9965 for GTA services and HSN 9967 no longer applies to GTA services and only to transport services taxable @18%.
2. Withdrawal of exemption in case of GTA services
An exemption has been withdrawn on services provided by GTA in relation to transportation of goods in goods carriage, where consideration charged- on a consignment transported in a single carriage does not exceed Rs.1500/- for transportation of all such goods for a single consignee does not exceed Rs.750/-
3. GST rate on Renting of goods carriage vehicle reduced to 12%
New Entry No. 10(ia) has been inserted under CGST Notification (Rate) No. 11/2017 dated 28.06.2017. to provide that renting of goods carriage with operators where cost of fuel is included in the consideration shall be liable to GST @12% under the HSN Code 9966 as against earlier GST rate of 18%.
SERVICES PROVIDED BY GTA OTHER THAN GOODS TRANSPORT
- Packing or unpacking.
- Loading or unloading.
- Temporary Warehousing.
- Other ancillary services.
If above mentioned services are provided separately than it is considered as independent activities and GST need to be pay as applicable.
But above services are not provided independently than they are covered under GTA service.
WHO IS LIABLE TO PAY GST?
If GTA exercises the option to itself pay GST on services supplied by it. (Foreword Charge):- Liable to pay GST: GTA SAC Code:9965 GST Rate: 5% (Without ITC) | 12% (With ITC)
