Classification of service provided by Truck owner to GTA and their taxation under GST

Hi Sunil,

Here's a detailed response based on GST laws and rulings regarding services by truck owners to GTAs and direct freight to unregistered persons:

Case 1: Truck owner providing trucks to GTAs (no agreement) and earning freight on trip basis

Q1. Classification & SAC Code:

• The service of hiring trucks with operator to a GTA (Goods Transport Agency) is classified as “Renting of trucks with operator” or “Transport of goods by road service” depending on arrangement.

• However, since the trucks are provided to a GTA who then undertakes transportation, the service is likely "Renting of trucks" service.

• The SAC code generally applicable for renting of trucks with operator is 996712 (Goods transport by road services).

• If trucks are provided without driver (operator), it would be "Renting of transport vehicles" under SAC 996721.

Q2. Taxability of amount received after deductions:

• The entire freight agreed upon is the gross value of service.

• Amount paid by GTA to driver and for diesel expenses are reimbursements or expenses incurred by the assessee, so these should be excluded.

• The net amount received from GTA (after deducting driver's payment and diesel expenses) is the taxable value for GST.

• The truck owner is liable to pay GST on the net amount received as service consideration.

Q3. How to declare in GST Return:

• Declare the net freight received as taxable value under SAC 996712 in outward supplies (GSTR-1).

• Input tax credit on GST paid on fuel/diesel may not be available if the truck owner is not registered for it separately, but expenses reimbursed by GTA should be excluded from taxable value.

Case 2: Assessee plying trucks directly for unregistered persons without issuing any documents

Q1. Whether freight amount is taxable?

• Yes, freight charges for transportation of goods by road are taxable under GST, irrespective of whether the recipient is registered or unregistered.

• The liability to pay GST is on the service provider (truck owner) if turnover exceeds threshold.

• For unregistered persons, reverse charge mechanism does not apply here; supplier is liable to pay GST.

Q2. How to declare in GST Return?

• The freight income from unregistered persons should be declared as outward taxable supplies under SAC 996712 in GSTR-1.

• GST should be paid on the full freight amount received.

• Even if no invoice is issued, the transaction is taxable and must be reported.

Supporting References / Judgements:

• CBIC Circular No. 134/04/20-GST dated 10.07.20 clarifies the classification of transport services under GST.

• The Goods Transport Agency (GTA) services are taxable under SAC 9967, but renting of trucks to GTA is renting service under 9967 series.

• The Supreme Court & various High Court rulings affirm GST applicability on transport services irrespective of recipient registration.

Summary Table: