Are you a Goods Transport Agency (GTA) ? Are you confused about whether you are liable to register today?
These are the top FAQ on GTA
Q.1 What is GTA?
Ans: “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;
The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-
- Loading/unloading
- Packing/ unpacking
- Trans-shipment
- Temporary warehousing etc.
If these services are included and not provided as independent activities, then they are also covered under GTA.
Under GST laws, the definition of Goods Transport Agency is provided in clause (ze) of notification no.12/2017-Central Tax (Rate) dated 28.06.2017.
(ze)
Services by way of transportation of goods are exempted:
(a) by road except the services of:
(i) a goods transportation agency;
(ii) a courier agency
(b) by inland waterways.
Therefore, the service of transportation of goods by road continue to be exempt even under the GST regime. GST is applicable only on goods transport agency, GTA.
Q2. What is the GST Slab rate for GTA?
Ans:
| Service by a GTA | GST rate |
Carrying-
|
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 | 0% ** |
| Transporting goods of unregistered casual taxable persons | 0% ** |
| Transporting goods (GST paid by GTA)* | 5% No ITC
or 12% with ITC |
| Transporting goods of 7 specified recipients* | 12% with ITC (paid by GTA)
Or RCM 5% no ITC |
| Hiring out vehicle to a GTA | 0% |
*As per Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017
** As per Notification No. 32/2017- Central Tax (Rate) dated 13th October, 2017
Q3. Who pays GST while hiring a GTA?
Ans. If a GTA provides the services to the certain businesses, recipient of services is required to pay GST under reverse charge.
Q4. Which businesses are liable to pay GST under reverse charge for a GTA?
Ans: The following businesses (recipient of services) are required to pay GST under reverse charge:-
- Factory registered
- A society registered any law
- A co-operative society established under any law;
- A GST registered person
- A body corporate established under any law; or
- A partnership firm whether registered or not (including AOP)
- Casual taxable person.
- If the transport charges (from an unregistered GTA) are less than Rs. 5,000 per day then no GST will be payable.
Q5. What are Input Tax Credit criteria for a GTA?
Ans. In respect of GTA, the liability to pay GST falls on the recipients under reverse charge in most of the cases. However, the GTA may opt to pay under forward charge.
GTA has 2 options-
12% GST with ITC *
OR
5% GST with no ITC*
However, the GTA has to opt at the beginning of financial year.
*As per Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017
Q6. If Service Receiver pays GST under RCM can he take ITC of it?
Ans. Service receiver can always avail ITC on GST paid under RCM.
Q7. BabaTax hired a GTA to transport his goods. The consideration charged was Rs. 1,200. Will BabaTax pay GST?
Ans. BabaTax will not pay GST under RCM as the consideration for transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500.
Q8. BabaTax hired a GTA to transport goods. The GTA was asked to come 2 days as BabaTax would receive the goods in batches. The entire consideration was Rs. 600. Will BabaTax pay GST?
Ans. BabaTax will not pay GST because the consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750.
Q9. BabaTax, a working professional, is moving houses and hires XYZ GTA to transport his household items. XYZ demands BabaTax to pay GST under RCM as moving charges are Rs. 6,000. BabaTax is confused.
Ans: BabaTax is unregistered and if XYZ GTA is also unregistered under GST then, GST is not applicable.
If XYZ is registered, then it will pay GST of 5%. RCM will not apply on Ajay.
Q10.BabaTax, a garments shop owner in Kolkata, hires a truck to deliver goods from wholesaler to his (BabaTax’s) shop. BabaTax’s turnover is less than 20 lakhs and he has not registered under GST. The GTA demands that BabaTax should pay tax under RCM. BabaTax argues that since he is not registered, he does not have to pay any GST.
Ans: Unregistered dealers (BabaTax) purchasing goods/services from unregistered GTA do not have to pay GST under reverse charge mechanism. If the URD hires from a registered GTA, then the registered GTA is liable to pay GST.
So, BabaTax is not liable to pay GST under RCM.
Q11.BabaTax now purchases garments from Assam and pays for a truck to deliver the goods to his shop in Kolkata. The GTA says that BabaTax has to register for GST as he is making an inter-state purchase as only registered dealers can have inter-state trade.
Ans: An unregistered person can make inter-state purchases. For making inter-state sales, he will have to be compulsorily registered.
Since, BabaTax is an unregistered dealer and the GTA is also unregistered then the concept of RCM does not arise.
Q12.The GTA is registered at Assam and its branch is collecting cash in Kolkata on his behalf. Recipient of service BabaTax is in Kolkata. If BabaTax was registered, would he have charged IGST or SGST/CGST under RCM?
Ans: If the original transporter in Assam bills BabaTax, then IGST should be charged. If he bills the branch then SGST/CGST will apply.
BabaTax has received a one-time contract to sell garments to a dealer in Mumbai. BabaTax hires a truck to send the goods.
Since, BabaTax is not registered under GST, he cannot make any inter-state sale. To make an inter-state sale, he must register as a casual taxable person. Then when he hires a truck to send the garments, automatically he is liable to pay GST under RCM.
Q13. BabaTax is sick of all this and decides to voluntarily register. He hires a truck again to transfer goods from the wholesaler to his shop. GTA asks him to pay GST on RCM as he is registered. But BabaTax’s view is that his turnover is still below 20 lakhs.
Ans: The threshold of turnover does not matter if a person is voluntarily registered. All provisions of GST Act will apply to a registered person. BabaTax is liable to pay GST under RCM.
Q14. BabaTax’s turnover has increased to 45 lakhs. He wants to shift to composition scheme as he sells mainly to end consumers. But he is worried as his GTA has told him they would not deliver his goods if he is registered under composition scheme as the GTA become liable for GST.
Ans: This is a myth. Even composition dealers are liable to pay GST under RCM. BabaTax will pay GST on RCM if he hires a GTA whether he is registered as a composition dealer or as a normal dealer.
Q15. What is the place of supply for GTA ?
Ans: The place of supply of services by way of transportation of goods, including by mail or courier to––
(a) a registered person, shall be the location of such person
(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.
Q16: I am a single truck owner-operator and I ply (give for work) my truck mostly between States, carrying the goods booked for my truck by an agent; aggregate value of service which I provided exceeded 20 lakh rupees during last year. Am I supposed to take registration?
Ans: You are not liable to registration, as services provided by way of transportation of goods by road are exempt.
Notification number 12/2017-Central Tax (Rate), dated 28thJune, 2017 refers.
Q17: I own a single truck and I rent it to a major player, who provides GTA service; should I take a registration? Does my monthly rental/lease income attract GST?
Ans: Registration is not required since services by way of giving on hire, a means of transportation of goods to a GTA are exempt from tax vide entry no.22 of Notification number 12/2017-Central Tax (Rate)dated 28thJune, 2017.
Q18: In my truck, I only carry fruits and vegetables, in relation to whose transportation service GST is exempt; should I take registration?
Ans: Services by way of transportation of goods by road other than by a GTA or a courier agency are exempt from tax under entry no. 18 of notification No. 12/2017-Central Tax (Rate) dated the 28thJune, 2017 and thus you are not liable for registration.
Q19: I am a truck supplier/broker. My job is to get orders for truck owners. I quote the rate for transportation to GTA on behalf of truck owners and I get a small amount as commission out of the truck hire fixed with the GTA. This brokerage is paid by the truck owners. As the services provided by way of transportation of goods by road are exempt from tax, am I liable to registration?
Ans: You are liable to registration if the aggregate amount of commission received by you in a financial year exceeds Rs. 20 lakhs (Rs. 10 lakhs in special category States except J & K).
Q20: As a transporter, am I required to maintain any records of my services of transportation?
Ans: Yes, in terms of section 35(2) of the CGST Act, 2017 you are required to maintain records of the consigner, consignee and other relevant details of the goods. Further, interms of rule 56 of the CGST Rules,2017 you are required to maintain records of goods transported, delivered and goods stored in transit by you along with the GSTIN of the registered consigner and consignee for each of your branches.
Q21: Are intermediary and ancillary services, such as, loading/unloading, packing/unpacking, transhipment and temporary warehousing, provided in relation to transportation of goods by road to be treated as part of the GTA service, being a composite supply, or these services are to be treated as separate supplies.
Ans: The GTA provides service to a person in relation to transportation of goods by road in a goods carriage, which is a composite service. The composite service may include various intermediary and ancillary 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.
Q22: As per Notification number 05/2017-Central Tax dated 19th June, 2017, the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the CGST Act,2017 are exempted from obtaining registration under the said Act. Please clarify whether a GTA providing service in relation to transportation of goods by road under reverse charge mechanism (RCM)can avail of the benefit of this exemption.
Ans: Yes, a GTA providing service in relation to transportation of goods by road under RCM can avail of the benefit of this exemption.
Q23: Can a GTA obtain registration for one vertical (Rail, Cargo, Renting, Warehousing etc.) for which tax needs to be paid while not obtaining registration for another vertical (GTA under RCM) on which there is no tax liability.
Ans: No, because the business entity is not engaged exclusively in the supply of services liable to tax under reverse charge mechanism.
Q24: In transport industry, old vehicles, old tyres, scrap material etc, on which no input tax credit(ITC)has been taken, are disposed of after completion of their useful life. As a truck owner disposing of these goods, am I required to pay GST considering that no ITC has been taken at the time of their initial purchases? Would levy of tax in such cases not amount to double taxation, as tax has already been paid at the time of initial purchases?
Ans: Under section 7 of the CGST Act, 2017 supply includes all forms of supply of goods such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Sale or disposal of old vehicles, old tyres and scrap material for a consideration would therefore attract GST regardless of whether ITC has been availed or not.
Q25: Please clarify whether input tax credit is available to the recipient of service, when the GST paid by him is at a concessional rate of 5% under RCM.
Ans:Yes, input tax credit is available in such cases.
Q26 :When a GTA hires a truck (with driver) from another GST registered entity for the purpose of providing goods transport service to a registered recipient, whether tax credit is available to the GTA on the GST paid by him to the owner of the truck registered under GST.
Ans: Services by way of giving on hire to a GTA, a means of transportation of goods are exempt from GST under Notification number12/2017-Central Tax (Rate) dated 28thJune 2017. Therefore, when the tax is not payable, the Question of taking any tax credit does not arise.
Q27. Whether RCM is applicable on payments made for hiring of transport from unregistered GST traders?
Ans. RCM under section 9(3) is applicable for GTA and not for transport of goods. Where the vehicle is taken on rent or lease , it will be supply of service under 9966 or 9973 and supply of service will be taxable under RCM under section 9(4).
Note: Reference to CGST Act, 2017/ CGST Rules, 2017includes reference to SGST Act, 2017/ SGST Rules, 2017and UTGST Act, 2017/ UTGST Rules, 2017also.
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