Recent Amendments of GTA
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or 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.
What service of transportation of goods is exempt under GST?
Services by way of transportation of goods are exempted:
- by road except the services of:
- a goods transportation agency;
- a courier agency
- by inland waterways.
Therefore, the service of transportation of goods by road continues to be exempt even under the GST regime. GST is applicable only on goods transport agencies, GTA.
What is a consignment note?
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.
What are the services provided by a GTA?
The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-
- Packing/ unpacking
- Temporary warehousing etc
GTA can exercise option to pay GST under forward charge
- 5% without ITC
- 12% with ITC
- Option to be exercised within a time frame in Annexure V
- Option for FY 2022-23 to be exercised before 16.08.2022
- Invoices for the period 18.07.2022 to 16.08.2022 can be issued before exercising the option provided option exercised on or before 16.08.2022
- Invoice requires a declaration in the format specified in Annexure III
Where GTA does not exercise the forward charge option
- GST at 5% under RCM
- No ITC on goods and services used in supplying the services
- RCM not applicable where the supplier of service has GST registration and has exercised option to pay GST under forward charge; issued invoice and made declaration prescribed in Annexure III on such invoice
Taxability of GTA’s under GST prior to the amendment:
Originally, the taxability of GTA was covered under reverse charge, wherein the customer who is the recipient of service were liable to pay tax under reverse charge @ 5%.
Further, w.e.f. 22.08.2017, an option was given to the GTA’s to charge GST @ 12% under forward charge to the customers, wherein they were also eligible for input tax credit.
The option once chosen had to be consistently followed and there was no mechanism to shift between the options year on year i.e., the GTA once opted for forward charge could not shift to the reverse charge mechanism.
Timelines for choosing the option for FY 2022-23
The option for the Financial Year 2022-2023 shall be exercised on or before the 16th August, 2022.
What if the declaration is not submitted for FY 22-23 prior to Aug 16, 2022?
If a GTA does not submit a declaration for FY 22-23 before Aug 16, 2022, then it would be deemed that the GTA has opted for taxability under reverse charge. Further, such GTA cannot later opt to pay tax under forward charge for FY 22-23.
Annexure I – Declaration for opting for forward charge:
Form for exercising the option by a Goods Transport Agency (GTA) for payment of GST on the GTA services supplied by him under forward charge before the commencement of any financial year to be submitted before the jurisdictional GST Authority.
Reference No.- Date: –
1. I/We (name of Person), authorised representative of M/s……………………. have taken registration/have applied for registration and do hereby undertake to pay GST on the GTA services in relation to transportation of goods supplied by us during the financial year……………under forward charge in accordance with section 9(1) of the CGST Act, 2017 and to comply with all the provisions of the CGST Act, 2017 as they apply to a person liable for paying the tax in relation to supply of any goods or services or both;
2. I understand that this option once exercised shall not be allowed to be changed within a period of one year from the date of exercising the option and will remain valid till the end of the financial year for which it is exercised.