Transportation is an important part of the economy, as transportation issues disrupt the entire business channel. For this reason, changes in gasoline prices have a widespread impact on business disruption. The most popular form of goods transportation in India is road transportation. According to the Indian National Highway Authority, about 65% of freight and 80% of passenger transportation are carried by road. Transportation of goods on the road takes place from a transporter or courier agent.
Which goods transportation service is excluded from GST?
Goods transportation services are excluded:
- On the road, except for the following services:
- Goods transport;
- home delivery trader
- Through the inland waterway.
Therefore, the service of goods transportation by road remains tax-exempt under the GST system. GST applies only to the Goods and Services agency, GTA.
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What is GTA?
According to Notice No. 11/2017 Central Tax (Tax Rate) of June 28, 2017, the “goods transport agency” or GTA provides services related to the transportation of goods by road and provides consignment notes of any name. That is, other people can hire a vehicle for freight transportation, That is, others can hire vehicles to transport goods, but only those who issue consignment notes are considered GTA. Therefore, the consignment note is a mandatory requirement to be considered a GTA.
What is a consignment note?
A consignment note is a document issued by a forwarding agent against the receipt of goods for the purpose of transporting goods by road in freight transport. If the carrier does not issue a waybill, the service provider will not be part of the freight business.
If a consignment note is issued, this means that the goods Lien have been handed over to the carrier. The carrier is now responsible for the goods until they reach the recipient safely.
The consignment note is in sequence and includes
- The Sender’s name
- Recipient’s name
- The Registration number for freight transportation where goods are transported
- Product information
- Place of origin-destination.
- Person is liable to pay GST – shipper, consignee, or GTA.
What services does GTA offer?
This service includes not only the actual transportation of goods but also other intermediate/auxiliary services.
- Load /unloads
- Intermediate storage, etc.
If these services are included and not offered as an independent activity, they also fall under the General Terms of Service.
What is the rate of GST on GTA?
|Service by a GTA||GST rate|
|Carrying-agricultural produces 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 defence or military equipment||0%|
|Carrying- goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500||0%|
|Carrying- goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750||0%|
|Any other goods||5% No ITC OR 12% with ITC|
|Used household goods for personal use||0% **|
|Transporting goods of unregistered persons||Earlier exempted, but later made taxable; currently, list yet to be notified**|
|Transporting goods of unregistered casual taxable persons||Earlier exempted, but later made taxable; currently, list yet to be notified**|
|Transporting goods (GST paid by GTA)*||5% No ITC or 12% with ITC|
|Transporting goods of 7 specified recipients*||if GTA Charges 12%, GTA must deposit tax and ITC can be availed. Otherwise, if GTA, Charges 5%, RCM applies and the recipient must deposit tax and ITC cannot be availed|
|Hiring out a vehicle to a GTA||0%|
According to the Notification 20/2017 Central Tax (Tax Rate) on August 22, 2017,
On December 31, 2018, the Government cancelled Notice No. 32/2017 Central Tax (tax rate) on October 13, 2017, and made purchases from unregistered dealers taxable. However, the list of registrants or transactions has not yet been communicated.
Is a GTA liable to register?
There was a lot of confusion as to whether GTA should be registered with GST. According to Central Tax Notice No. 5/2017 of June 19, 2017, GST-based registration is exempted for those who provide only taxable goods/services subject to the Reverse Charge Mechanism (RCM).
Therefore, GTA must register with GST if the consignee only ships goods for which the consignee is required to pay full tax (even if turnover exceeds the threshold) under the reverse charge basis. There is none.
Which businesses need to pay GST as part of GTA’s reverse charge?
The following businesses (recipients of the service) are required to pay GST with a reverse charge.
A factory registered under the Factory Act of 1948.
A society established under the Societies Registration Act of 1860 or any other law.
A cooperative is established under any laws.
A company established by law or under the law. Also
Incorporated or unincorporated partnership companies (including AOP)