GST on GTA (Goods Transport Agency)

Transportation of goods by road are done by transporter or courier agency.

Will discuss in this article about the transporter, i.e, the GTA.

Services by way of transportation of goods by road are exempted except the services of:

(i) Goods transportation agency;

(ii) Courier agency

Meaning of GTA:

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 only those issuing a consignment note are considered as a GTA, while others might also hire out vehicles for goods transportation. Thus, a consignment note is an essential condition to be considered as a GTA.

What is a consignment note and 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 goods transport agency.

Purpose: If a consignment note is issued, the lien on the goods has been transferred to the transporter and he is responsible for the goods till its 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.

GST Effect on GTA Services:

Transportation of goods is mostly provided by unorganized sector and hence they have been specifically excluded from the tax net. In respect of GTA, the liability to pay GST falls on the recipients under reverse charge in most of the cases. However, the GTA may opt to pay under forward charge.

Exmption Limit: No GST on freight charges required to be paid,

a) in case consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs.1,500/- or

b) where consideration charged for transportation of all such goods for a single consignee is less than exceed Rs.750/-

Rates of GST on GTA: As per notification No 20 / 2017-Central Tax (Rate) 22nd August 2017, GTA has to opt either of the below options.

  • 12% GST with ITC (Forward Charge), or

  • 5% GST with no ITC (Reverse Charge)

Reverse charge is applicable on GTA Services @ 5% and ITC is available.

Registration requirement for GTA:

GTA no need 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 20 lakhs). [Notification No. 5/2017- Central Tax dated 19/06/2017]

Who will pay GST under Reverse Charge?

GST Shall be paid by the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory and he shall be treated as the receiver of service.

It means who is paying the freight, will be person responsible for remitting the GST Liability to the govt.

Businesses liable to pay GST under RCM - GTA:

The following businesses (recipient of services) are required to pay GST under reverse charge:-

  1. Factory registered under the Factories Act,1948;

  2. A society registered under the Societies Registration Act, 1860 or under any other law

  3. A co-operative society established under any law;

  4. A GST registered person

  5. A body corporate established by or under any law; or

  6. A partnership firm whether registered or not (including AOP)

  7. Casual taxable person.

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