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 most popular form of transport is via road.
There are Three type of persons who are engaged in transport of Goods by Road.
- Normal Transporter (Who does not issue Consignment Note).
- Goods Transport Agencies (Who are issue Consignment Note).
- Courier Agency.
Serial No. 18 of Notification No. 12/2017- Central Tax (Rate)_28.06.2017 provide the following exemption.
Services by way of transportation of goods by road except the services of,
- A goods transportation agency.
- A courier agency.
From the above exemption, it can be concluded that GTA Services are taxable and hence we will discuss the GST Implication on GTA Services.
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 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 Note, while other 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.
SAMPLE OF CONSIGNMENT NOTE
SERVICES PROVIDED BY GTA OTHER THAN GOODS TRANSPORT
- Packing or unpacking.
- Loading or unloading.
- Temporary Warehousing.
- Other ancillary service.
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)
The option by GTA to itself pay GST on the services supplied by it during a Financial Year shall be exercised by making a declaration in Annexure V on or before the 15th March of the preceding Financial Year.
Here I am specifying herewith the Annexure V format.
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.
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.
Legal Name: -
Signature of Authorised representative:
Name of Authorised Signatory:
Full Address of GTA:
(Dated acknowledgment of jurisdictional GST Authority)
If GTA does not exercises the option to itself pay GST on services supplied by it. (Reverse Charge)
Liable to pay GST:-Any Factory, Society, Co-Operative Society, Any GST Registered person, Any Body Corporate, Any Partnership Firm whether Registered or Not, Casual taxable person.
(Provided all are these located in Taxable Territory and liable to pay the freight for transportation of goods).
- SAC Code: 9965
- GST Rate: 5% (Without ITC)
PLACE OF SUPPLY FOR GTA
The place of supply of services by way of transportation of goods, including by mail or courier to,
- A registered person, shall be the location of such person
- A person other than a registered person, shall be the location at which such goods are handed over for their transportation.
REGISTRATION FOR GTA
Every supplier shall be liable to be registered under this Act in the State or Union territory from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds the threshold limit.
- Aggregate turnover: As per Section 2(6) of CGST Act, 2017 "aggregate turnover" means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.
- Threshold Limit: For Service Provider is Rs. 20 Lakhs.
TREATMENT OF INTERMEDIARY AND ANCILLARY SERVICE
GTA provides service to a person in relation to transportation of goods by road in a goods carriage, which is a composite service. Intermediary and ancillary services may include various services such as loading/unloading, packing/unpacking, transhipment and temporary warehousing, which are provided in the course of transport of goods by road. These services are not provided as independent services but as ancillary to the principal service, namely, transportation of goods by road. The invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services.
In view of this, if any intermediary and ancillary service is provided in relation to transportation of goods by road, and charges, if any, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply. In fact, any service provided along with the GTA service that is part of the composite service of GTA shall be taxed along with GTA service and not as separate supplies.
However, if such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies.
SAC CODE & GST RATE WHERE GOODS TRANSPORT VEHICLES PROVIDED ON RENT
SAC CODE:- 9966
GST RATE (WITH OPERATOR):-
- Renting of goods carriage where the cost of fuel is included in the consideration charged from the service recipient: 12%
- Others: 18%
GST RATE (WITHOUT OPERATOR):- 18%
WHAT ARE EXEMPTION AVAILABLE TO GTA
Services provided by a goods transport agency, by way of transport in a goods carriage of,
- Agricultural produce
- Milk, salt and food grain including flour, pulses and rice
- Organic manure
- Newspaper or magazines registered with the Registrar of Newspapers
- Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
- Defence or military equipment.