RCM on GTA

GST Provisions for Goods Transport Agency

GST Provisions for Goods Transport Agency

The implementation of Goods and Service Tax ushered in much needed reforms in India’s largely unorganized logistics and transport sector, and helped to speed up the movement of trucks. Since the border checkposts were dismantled, after implementation of Goods and Service Tax, the same has led to around 20% reduction in turnaround time. The e-way bill implementation on consignments of INR 50,000 and more has gradually freed the transporters from unnecessary checking by the state government. In whole-some, there is a win-win situation for the transport sector, post implementation of the Goods and Service Tax.

Present article tries to explain the definition and coverage of ‘Goods Transport Agency’, the exemption available to various services of ‘Goods Transport Agency’, applicability of reverse charge mechanism and taxability thereon and GST rates on Goods Transport Agency.

DEFINITION AND COVERAGE OF GOODS TRANSPORT AGENCY UNDER GST

  • DEFINITION AND COVERAGE OF GOODS TRANSPORT AGENCY UNDER GST
  • EXEMPTION FROM GST TO VARIOUS SERVICES OF GOODS TRANSPORT AGENCY –
  • APPLICABILITY OF REVERSE CHARGE MECHANISM  TO GOODS TRANSPORT AGENCY
  • TAXABILITY AND GST RATES ON GOODS TRANSPORT AGENCY 

The definition of ‘Goods Transport Agency’ has been provided under clause (ze) of the notification no. 12/2017 – Central Tax (Rate) dated 28th June, 2017 and it means –

  • any person who provides service in relation to the transport of goods by road; and
  • the transporter issues consignment note, by whatever name called.

Thus going through the above definition it can be easily concluded that, to classify the service under the category of ‘Goods Transport Agency’, two points are important first if the person provides service of transport of goods by road and the second is the issuance of consignment note by the transporter.

It is important to understand term the consignment note. A consignment note is a serially numbered document issued by the transporters when they have received goods that are ready to move. The consignment note contains the following details –

  • The names of the consignor and consignee;
  • Registration number of the vehicle in which the goods are transported;
  • Details of the goods;
  • Place of origin and place of destination;
  • Details of the person liable for paying tax on the goods (whether consignor, consignee or the GTA).

EXEMPTION FROM GST TO VARIOUS SERVICES OF GOODS TRANSPORT AGENCY –

Before going into the taxability of goods transport agency let us first have a look into the services of Goods transport agency which are being exempted from the payment of GST –

As per sr. no. 21 of the notification no. 12/2017 – Central Tax (Rate) dated 28th June, 2017 (CGST and SGST) and sr. no. 22 of the notification no. 9/2017 – Integrated Tax (Rate) dated 28th June, 2017 (IGST), exempts services provided by a goods transport agency, by way of transport in a goods carriage of –

  • Where the amount charged for the transportation of goods on a consignment transport in a single carriage is less than INR 1,500.
  • Where amount charged for the transportation of all such goods for a single consignee is less than INR 750.
  • Agricultural produce;
  • Organic manure;
  • Milk, salt and food grains including flour, pulses and rice;
  • Defence or military equipment;
  • Newspaper / magazines registered with the Registrar of Newspaper;
  • Relief material which is meant for the victims of natural / man-made disasters, calamities, accidents or mishaps.

APPLICABILITY OF REVERSE CHARGE MECHANISM  TO GOODS TRANSPORT AGENCY

In the case of Goods Transport Agency, as per notification no. 13/2017 – Central Tax (Rate) dated 28th June, 2017 (CGST and SGST) and notification no. 10/2017 – Integrated Tax (Rate) dated 28th June, 2017 (IGST), the following list of service receiver is liable to pay the GST under reverse charge mechanism –

  • A factory which is registered under the Factories Act, 1948;
  • A society which is registered under the Societies Registration Act or under any other law;
  • A co-operative society;
  • A person registered under the Goods and Service Tax Act;
  • A body corporate;
  • A partnership firm;
  • An Association of persons;
  • A casual taxable person.

TAXABILITY AND GST RATES ON GOODS TRANSPORT AGENCY 

DescriptionRatesConditions for availing lower ratesNotification no.
INTRA-STATE SUPPLY OF SERVICE – Services of goods transport agency in relation to transportation of goods.2.5% CGST and 2.5% SGSTInput tax credit on goods / services used for supplying the services has not been taken.11/2017- Central Tax (Rate) dated 28th June, 2017
INTER-STATE SUPPLY OF SERVICE – Services of goods transport agency in relation to transportation of goods.5% IGSTInput tax credit on goods / services used for supplying the services has not been taken.8/2017- Integrated Tax (Rate) dated 28th June, 2017

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