Edukating
Taxability of Goods Transport Agencies
Taxability of Goods Transport Agencies (hereinafter referred to as GTA) under the GST era, will have lots of confusion. So we are discussing the relevant provision and relevant notification issued till June 2023 in detail.
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Meaning of Goods Transport Agency (GTA) –
As per Para 2(ze) of Notification No 12/2017 - 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.
Meaning of Consignment note: It is not defined in the GST. However, as per Explanation to Rule 4B, Service Tax Rules, 1994, 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 which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are
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Registration requirement for GTA:
As per Notification No. 05/2017 –Central Tax (CT) dated 28th June 2017, it specifies that the persons who are only engaged in making the outward supplies on which tax will be paid under RCM by the recipient then supplier is exempted from registration.
Also, Section 23(1)(a) of CGST Act, a person will not be liable to registration who are engaged exclusively in the not taxable supply or wholly exempt supplies.
Thus, to summaries GTA is required to register only in the following cases:
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GTA not exclusively engaged in services of transport of goods by road. For e.g. GTA also having other business verticals in the same PAN, making taxable supplies
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GTA Service provider who wish to opt forward charge
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If recipient is located in the Non-Taxable territory
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GTA Service - Exempt Supply
GTA Service will be exempt in following categories –
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Transportation for Specified purpose/goods - Refer below Point No 3A
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Recipient is not of 7 specified category - Refer below Point no 3B
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Recipient is a Govt etc registered only for the TDS under GST - refer below Point no. 3C
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Transportation of Goods by road other than GTA - Refer below point no 3D
3A. Transportation of Specified Purpose/Goods –
As per Sr No 21 of NN 12/2017 – CT (Rate) dated 28th June 2017, Services provided by a GTA, by way of transport in a goods carriage of following, is an exempt supply –
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Agricultural produce;
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Goods, where consideration charged in a single carriage does not exceed Rs 1,500; (Omitted by NN 04/2022-CT (R) dated 13.07.2022 w.e.f. 18.07.2022)
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Goods, where consideration charged for a single consignee does not exceed Rs 750; (Omitted by NN 04/2022-CT (R) dated 13.07.2022 w.e.f. 18.07.2022)
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Milk, salt and food grain including flour, pulses and rice;
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organic manure;
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newspaper or magazines registered with the Registrar of Newspapers;
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relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
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Defence or military equipment.
3B. Recipient is other than 7 Specified Category
NN 32/2017 – CT (Rate) dated 13th Oct 2017 has added a New serial number i.e. Sr. No 21A in the NN 12/2017 CT(Rate). According to this, If the GTA provide the service to a recipient other than 7 specified category then such GTA Service would be exempted. 7 Specified categories of recipient are as under –
(a) any factory registered under or governed by the Factories Act, 1948; or
(b) any society registered under the Societies Registration Act, 1860or
(c) any co-operative society established; or
(d) any person registered under the Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not including association of persons; or
(g) any casual taxable person.
3C. Recipient is a Govt etc registered only for TDS under GST
As per NN 28/2018-CT(Rate) dated 31.12.2018 a new serial number 21B is added in the exemption NN 12/2017 CT (Rate). Services provided by a GTA, by way of transport of goods in a goods carriage, to a Department or Establishment of the Central Government or State Government or Union territory; or local authority; or Governmental agencies, which has taken registration only for the purpose of deducting tax under Section 51 and not for making a taxable supply of goods or services, would be exempted in the GST.
3D – Goods Transport Operator
If the Supplier (Transporter) does not issue the consignment note (Bilty/Lorry Receipt by whatever name called) then such service of Transportation of Goods by Road (Like Tempo, Auto etc) will not be categorised as GTA Service and it is an Exempt Supply as per Serial No 18 of NN 12/2017 – CT (R) dated 28th June 2017.
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Process for opting forward charge by GTA –
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Submit the declaration in Annexure V by 15th March before the start of the Financial Year in case of existing tax payer. For ex: If a GTA wishes to opt for paying tax under forward charge for FY 24-25, then it needs to submit a declaration on or before March 15, 2024. (One time extension for the FY 2023-24 by 31st May, 2023).
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A GTA who commences new business or crosses threshold for registration during any Financial Year, may exercise the option of forward charge by making a declaration in Annexure V before the expiry of 45 days from the date of applying for GST registration or 1 month from the date of obtaining registration whichever is later.".
Further, the GAT who has opted forward charge, has issued a tax invoice to the recipient charging Central Tax at the applicable rates and has made a declaration as prescribed in Annexure III on such invoice issued by him.
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RCM on supply provided by unregistered GTA on or after 13th October 2017
If GTA is unregistered then whether RCM is applicable or not, need to analyse. According to Section 9(4) of CGST Act, if the Supplier is Unregistered and Recipient is registered then such registered recipient will pay the tax under reverse charge. This Section is suspended from 13th Oct’17 and then Section 9(4) has been amended.
However, it is important to note that GTA is covered under reverse charge by virtue of section 9(3) which is not suspended. Therefore, even if the GTA is unregistered, still the recipient will be liable to pay the tax under RCM.
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Reporting of GTA Transaction by Supplier and Recipient in GSTR 3B and GSTR 1
Transaction is falling under Reverse Charge
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Reporting by the registered recipient paying GST under RCM, of GTA Service
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in GSTR 3B –
i) Under Table 3.1.d ‘Inward Supply liable to Reverse Charge’ and
ii) Take the Input Tax Credit by reporting in Table 4.A.3 (Inward Supply liable to reverse charge other than 1 & 2 above)
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in GSTR 1 –
GSTR 1 is the details of outward supply however the GTA Service is the Inward Supply for the recipient therefore it will not be reported in GSTR 1 by the recipient. Only Self Invoice numbering is to be reported in the table 13, if GTA is unregistered in the GST.
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Reporting by the Registered GTA on which tax is paid by recipient under RCM–
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In GSTR 1 –
a. Under Table 4B if it is B2B (on which recipient is liable to pay the tax under RCM) or
b. Under Table 8 - If it is exempt Supply (Like falling under serial no 21A, 21B, 21, 18 of NN 12/2017 – CT (Rate) etc.
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In GSTR 3B - It will be reported as Outward Supply under GSTR 3B Table 3.1 (Ideally it should come under 3.1.a being the outward taxable supply however we will not be able to proceed with the data if we put the taxable without putting the corresponding tax amount against the 3.1.a.
Therefore, in my view, we need to report under Table 3.1. (c)
Transaction is falling under Forward Charge
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Reporting by the Supplier (GTA) who has opted Forward charge:
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GSTR-1
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under Table 4A (Not under 4B) if it is taxable supply and made to registered recipient,
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under Table 5A - Taxable supply made to unregistered inter-state and having large Invoice value,
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under Table 6A/6B/6C - Supply made to Export / SEZ / Deemed Export
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under Table 7 - Taxable supply to unregistered inter-state other than table 5,
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Under Table 8 - If it is exempt Supply.
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In GSTR-3B - it will be reported as Outward Supply under Table 3.1 (a). Also it will be reported in the Table 3.2 if it is supplied inter-state to unregistered recipient. Table 3.2 is only the disclosure and does not create any tax liability.
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Registered recipient:
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In the GSTR 3B
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If ITC is eligible - Will be reported in Table 4A(5) of GSTR-3B for availing ITC. The details of Invoices raised by registered GTA will be auto-populated in GSTR – 2A/2B of the registered recipient.
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If ITC is not eligible – Then add in the table 4A5 and then reverse in table 4B (For detail please refer circular 170/02/2022 dated 6th July 2022
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Rate of Tax –
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Forward/Normal Charge – GTA will charge GST@ 5% or 12%
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Reverse Charge - Recipient will pay the tax @5% and be eligible to take full input tax credit subject to the other condition of Sec 16 to 18 of CGST Act.
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Service Accounting Code –
Transportation of Goods by Road will have the SAC Code 9965 or 9967
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Place of Supply and Nature of Transaction under Reverse Charge on GTA –
If location of Supplier (LOS) and Place of Supply (POS) are in the same state/ Union Territory (UT) then the supply will be intra-state (Section 8 of IGST Act) and CGST & SGST will be paid by the registered recipient under RCM.
Vice versa If LOS and POS are in two different states or two different Union Territories or in one state or one UT then the supply will be interstate (Section 7 of IGST Act) and ICGST will be paid by the registered recipient under RCM.
Place of Supply for the transportation of goods by road is determined as per Section 12(8) of IGST Act (if LOS and LOR both are in India) and per Section 13(9) of IGST Act (if LOS and LOR any one is outside India).
For example, Mr A is a registered person in Delhi and has purchased goods from Rajasthan. Goods are transported by road to Delhi by a transporter of Rajasthan. Therefore we can say that the Location of Supplier is Rajasthan. Now the recipient (being Mr A, as he is liable to pay the freight) is from Delhi. Therefore Place of Supply as per Section 12(8) is Delhi being the location of the recipient. Hence it is an Inter State Supply as per Section 7 of the IGST Act and Mr A will pay IGST under RCM.
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Self-Invoice as per Section 31(3)(f) of CGST Act-
As per Section 31(3)(f) a registered person who is liable to pay tax u/s 9(3) or Section9(4) of CGST Act shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered.
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Payment Voucher as per Sec 31(3)(g) of CGST Act-
A registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier.
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E Invoice for GTA-
As per the NN 13/2020 – CT(Rate) dated 21.03.202 that invoice shall be prepared in prescribed documents, in terms of sub-rule (4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person or for exports.
Further the limit has been reduced from Rs 10 Cr to Rs 5 Cr from 1st August 2023. However, GTA is covered by the Rule 54(3) and therefore as per the above notification, GTAs are exempted from E Invoice.
