Introduction:

The term GTA stands for Goods Transport Agency. This term has its importance under GST because of the unique taxability of these services. The legal position of a person who is providing service of transportation of goods (Except GTA) is exempt from tax i.e GST does not apply to such supplies. The GST is applicable only if the person supplying goods is a Goods Transportation Agency. The recipient of this service is liable to pay tax under the reverse charge mechanism. The whole concept has been cleared hereinafter.

What is GTA- GTA stands for Goods transportation agency.

Any person providing service of transportation of goods by road and issuing the consignment note by whatever name is called is to be considered as GTA. The here most important thing to note is that to be considered GTA, one has to issue the consignment note. If the consignment note is not issued, the transporter will not fall within the ambit of GTA. The Consignment note is the indication that it is the responsibility of the transporter (GTA) to safely deliver the goods to the consignee. The services provided by those individual transporters who do not issue a consignment note will be covered by the entry at s.no.18 of notification no.12/2017-Central Tax (Rate), which is exempt from GST.

What is a consignment note?

A consignment note is not defined under the GST act so we are taking reference to Service tax rules where the explanation of the consignment note is given. It has been described as the consignment note is the document issued by GTA. The consignment note must be serially numbered and a few pieces of information must be prescribed on it such as details of consignee and consignor, description of goods, their quantity and rates, detail of place of origin of goods and their destination, the registration number of the vehicle through which goods are being transported.

Rate of GST applicable to GTA:  

Recently the government has issued a new set of GST rates applicable to GTA. The notification 03/2022 Central Tax (Rate) dated 13/07/2022 has amended serial number 9 of the original notification 11/2017 Central Tax (Rate) dated 28/06/2017 which indicates the GST rates applicable to GTA. According to the latest notification, the Goods transport agency has two options available.

Option No-1:  GTA does not exercise an option to pay tax by itself. Meaning that the receiver of services shall pay the tax under Reverse Charge Mechanism. In this case, 5% (2.5% CGST and 2.5%5 SGST) GST shall be applicable. Here the liability to deposit the tax shall be with the receiver of the service. In such a scenario the GTA is not allowed to take ITC of inputs.

Option 2: GTA exercises the option to pay tax by itself. In such case, the supplier i.e GTA shall collect the tax from the receiver and deposit it with the government. Here the liability to deposit the tax shall be with the GTA. In such a case, GTA shall collect GST at 12% if GTA wants to take and utilize the ITC. If GTA does not want to take the benefit of ITC then a 5% GST rate shall be applicable and GTA is liable to collect only 5% from the receiver and deposit it with the government. So the fundamental difference between the two rates’ applicability in option 2 is that of the benefit of ITC. If GTA wants to take the benefit of ITC then 12% GST shall be applicable or if GTA does not want to take the benefit of ITC then 5%.

The basic different difference between option number 1 and 2 is the mechanism to pay the tax. Under option number 1, the receiver shall deposit the tax under Reverse Charge Mechanism. Under option number 2, the supplier i.e the GTA shall deposit the tax.

If GTA wants to exercise the option to pay tax by itself then the declaration in Annexure-V (Attached herewith) has to be submitted on or before the 15^th of March of the preceding financial year.

GTA services are exempt for a certain category of goods or services. Here’s the list.

As per notification 12/2017 Central Tax (Rate) dated 28/06/2017, the following services provided by GTA are exempt from payment of tax.

Services provided by GTA by way of transportation of:

1. Agriculture product
2. goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees
3. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty
4. milk, salt and food grain including flour, pulses and rice;
5. organic manure
6. Newspapers or magazines registered with the Registrar of Newspapers
7. relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishaps; or
8. defence or military equipment

Similarly, the following services received by the GTA are also exempt in terms of notification no.12/2017- Central Tax (Rate) dated 28.06.2017 (sr.no.22)

• Services by way of giving on hire to any goods transport agency, a means of transportation of goods.

Thus, if the GTA hires a means of transportation of goods, no GST is payable on such transactions.

Conclusion:

From the above discussions, we can say that not all those transporters are GTA. To qualify as GTA the transporter has to necessarily issue the consignment note. Any transport services provided by a person other than GTA are exempt from taxes.

FYI–

Annexure-V

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.

Reference No.-

Date: –

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  …………..under  forward  charge following 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 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: –

GSTIN: –

PAN No.

Signature of Authorised representative:

Name of Authorised Signatory:

Full Address of GTA: