Comprehensive Guide to Goods Transport Agency (GTA) under GST in India

Understanding the tax implications for the transport of goods is crucial under the Goods and Services Tax (GST) regime in India. A key player in this sector is the Goods Transport Agency (GTA). This article provides a comprehensive overview of GTA under GST, incorporating frequently searched terms and explaining the relevant provisions.

Recent GST Council meetings Updates

1. Clarification on Ancillary Services (54th GST Council Meeting, Sep 2024): A significant clarification was made regarding services incidental to the transportation of goods by a GTA. Services like loading, unloading, packing, unpacking, transshipment, and temporary warehousing, when provided by a GTA in the course of transportation and where a consignment note is issued, will be treated as a composite supply. This means they will be taxed at the same rate as the main GTA service (5% or 12%). However, if these services are invoiced separately, they might be treated as separate supplies.  
2. Exemptions and Taxability Changes (55th GST Council Meeting, Dec 2024/Jan 2025):
   • Transport of Used Household Goods: The transport of used household goods for personal use has been exempted (0% GST).  
   • Vehicle Hiring to a GTA: The service of hiring out a vehicle to a GTA has also been exempted (0% GST).  
   • Services by Unregistered Persons: The taxability of services by unregistered persons, previously exempt, is now intended to be taxable, but specific notifications are awaited for the final list. While this is a broader change, it could potentially impact how transactions with unregistered transporters (not necessarily GTAs issuing consignment notes, but those transporting goods) are treated in the future.

These updates show the GST Council’s focus on clarifying the scope of composite supply for GTA services and providing specific exemptions for certain types of transportation, including household goods and vehicle rentals to GTAs.

What is a Goods Transport Agency (GTA) under GST?

The definition under GST for a GTA is specific. It is not merely a transporter who physically moves goods. A Goods Transport Agency is defined as any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. The issuance of a consignment note is the defining characteristic that distinguishes a GTA from a regular transporter. A consignment note is a document issued by a GTA acknowledging the receipt of goods for the purpose of transportation by road and also indicating the details of the consignor, consignee, place of origin, destination, and the person liable for paying freight.

The service provided by a GTA is a composite supply, which includes not only the actual transportation but also ancillary services provided in relation to the transport of goods, such as loading, unloading, packing, unpacking, trans-shipment, and temporary warehousing. When these services are provided along with the transportation and a consignment note is issued, they are taxed at the same rate as the principal service of goods transport.

Who are Consignor and Consignee?

In the context of goods transportation:

• Consignor: The person who sends the goods.
• Consignee: The person to whom the goods are sent.

Under the GTA Reverse Charge Mechanism (RCM), the liability to pay GST often falls on the consignor or consignee if they are registered entities and are liable to pay the freight.

Applicability of GST on GTA

GST on GTA services is applicable. The service provided by a GTA, being the transportation of goods by road along with ancillary services, falls under the purview of GST unless specifically exempted. Businesses engaging with GTAs need to understand the applicability of GST on GTA to ensure correct tax payment and compliance. GTA services are classified under SAC (Services Accounting Code) 9965.

GTA GST Rate and Mechanism: RCM vs. Forward Charge

One of the unique aspects of GST on transport of goods by a GTA is the option available regarding who pays the tax. There are two primary mechanisms:

1. Reverse Charge Mechanism (RCM)
2. Forward Charge Mechanism (FCM)

The GTA GST rate can be either 5% or 12% under these mechanisms.

GTA Reverse Charge Mechanism (RCM)

The GTA Reverse Charge Mechanism (RCM) is the default mechanism for specified recipients. Under RCM, the liability to pay GST shifts from the service provider (GTA) to the recipient of the service. This means the consignor or consignee who is liable to pay the freight is responsible for paying the GST on GTA services directly to the government.

Under RCM, the applicable GST rate is 5%. The GTA providing service under RCM is not eligible to claim Input Tax Credit (ITC) on the inputs and input services used for providing the GTA service.

Who is liable to pay GST under RCM for GTA services?

RCM applies when the recipient of GTA services is one of the following registered persons:

• Any factory registered under or governed by the Factories Act, 1948.
• Any society registered under the Societies Registration Act, 1860 or under any other law.
• Any co-operative society established by or under any law.
• Any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act.
• Any body corporate established by or under any law.
• Any partnership firm or any limited liability partnership.
• Any casual taxable person.

If the recipient falls into any of these categories and is liable to pay the freight, they are required to pay GST under RCM at the rate of 5%. The GTA in this case does not charge GST in their invoice. The recipient is required to report this RCM liability and corresponding ITC (if eligible) in their GSTR-3B return.

Example of GTA RCM: A manufacturing company in Maharashtra (registered recipient) hires a GTA in Gujarat to transport raw materials from Delhi to Mumbai. The manufacturing company is liable for freight. Since they are a registered recipient falling under the specified categories, they will pay the freight amount to the GTA and calculate and pay GST @ 5% directly to the Maharashtra government (SGST) and Central government (CGST) if the supply is intra-state (within Maharashtra, assuming the GTA is also registered in Maharashtra and the PoS is Maharashtra) or to the Central government (IGST) if the supply is inter-state (from Gujarat to Maharashtra). The GTA will not charge GST on their invoice to the manufacturing company.

GTA Forward Charge

A GTA has the option to opt for the Forward Charge mechanism. If a GTA chooses this option, they are required to charge and collect GST from their clients and pay it to the government.

For a GTA to opt for the Forward Charge mechanism, they must:

• Exercise the option to pay GST on the services supplied by them under Forward Charge at either 5% (without ITC on input services) or 12% (with full ITC).
• Issue a tax invoice charging GST at the chosen rate (5% or 12%).
• File a declaration in the prescribed format (Annexure V) by the specified due date for the financial year, opting for the Forward Charge mechanism.

Once a GTA opts for the Forward Charge mechanism, they cannot switch back to RCM during the financial year.

Example of GTA Forward Charge: A GTA opts for the Forward Charge mechanism and chooses the 12% rate. They transport goods for a client and the freight is Rs. 10,000. The GTA will issue a tax invoice charging GST @ 12% (Rs. 1,200) on the Rs. 10,000 freight. The client pays Rs. 11,200 to the GTA, and the GTA pays the Rs. 1,200 GST to the government. The GTA can claim ITC on their eligible business expenses incurred for providing this service.

Input Tax Credit (ITC) for GTA

The availability of Input Tax Credit (ITC) for GTA depends on the GST rate chosen under the Forward Charge mechanism:

• Under RCM (5% rate): The GTA cannot avail ITC on the inputs and input services used for providing the GTA service. The recipient paying tax under RCM may be eligible to claim ITC of the GST paid, subject to other GST provisions.
• Under Forward Charge (5% rate): The GTA cannot avail ITC on the inputs and input services used for providing the GTA service.
• Under Forward Charge (12% rate): The GTA is eligible to avail full ITC on the inputs and input services used for providing the GTA service.

This difference in ITC availability is a key factor for GTAs when deciding whether to opt for the 5% or 12% rate under Forward Charge.

How to Determine Place of Supply (PoS) for a GTA

Determining the Place of Supply (PoS) for GTA services is crucial to ascertain whether the supply is intra-state (attracting CGST + SGST/UTGST) or inter-state (attracting IGST). The PoS rules for transportation of goods are provided in Section 12 and Section 13 of the IGST Act, 2017.

• When the Recipient is Registered: If the recipient of GTA services is registered under GST, the Place of Supply is the location of the recipient. This is the general rule for services provided to a registered person.
  • Example: A manufacturing company in Maharashtra (registered recipient) hires a GTA in Gujarat to transport goods from Delhi to Mumbai. The recipient is in Maharashtra, so the PoS is Maharashtra. This will be an inter-state supply from the GTA’s location (Gujarat) to the recipient’s location (Maharashtra), attracting IGST.
• When the Recipient is Unregistered: If the recipient of GTA services is unregistered:
  • If the goods are addressed to a specific person (i.e., the location of the recipient is known), the Place of Supply is the location at which such goods are handed over for their transportation.
  • If the location of the recipient is not known, the Place of Supply is the location of the supplier (GTA). However, in the context of GTA services, the goods are almost always addressed to a specific consignee, so the former part of this rule is usually applicable.
  • Example: An individual in Uttar Pradesh (unregistered recipient) hires a GTA in Delhi to transport household goods from Delhi to Lucknow. The goods are handed over for transportation in Delhi. Therefore, the PoS is Delhi. This will be an intra-state supply (assuming the GTA is registered in Delhi), attracting CGST + SGST.

Understanding the recipient’s registration status and the location where goods are handed over is key to correctly determining the PoS for GTA services.

Exemption for GTA under GST

Certain services provided by a GTA are exempt from GST. This provides relief for specific types of transportation or for small GTAs. One significant exemption for GTA under GST is for the transport of goods where the consideration for the transportation of goods on a consignment transported in a single carriage does not exceed a specified amount (e.g., Rs. 1,500) or the consideration for transportation of all such goods for a single consignee does not exceed another specified amount (e.g., Rs. 750). There are also exemptions for the transport of specific goods like:

• Agricultural produce
• Milk, salt, and food grain including flour, pulses and rice
• Newspapers or magazines registered with the Registrar of Newspapers
• Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
• Defence or military equipment
• Goods where the gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
• Goods where the gross amount charged for transportation of all such goods for a single consignee does not exceed seven hundred and fifty rupees.

These exemptions are crucial for determining the applicability of GST on GTA for specific consignments.

GST Compliance for GTA

GST compliance for GTA depends on whether they operate under RCM or opt for Forward Charge.

• Under RCM: If the GTA is exclusively providing services to recipients liable under RCM and their aggregate turnover does not exceed the threshold for registration, they may not be required to obtain GTA registration under GST. However, if they provide any other taxable service or their turnover exceeds the threshold, registration is mandatory. Recipients liable to pay GST under RCM must register under GST regardless of their turnover.
• Under Forward Charge: If a GTA opts for the Forward Charge mechanism, they must obtain GTA registration under GST if their aggregate turnover exceeds the prescribed limit (currently Rs. 20 lakhs for services, with a lower limit of Rs. 10 lakhs for certain special category states). They are then required to comply with all regular GST obligations, including filing monthly/quarterly returns (GSTR-1, GSTR-3B), paying tax, and issuing tax invoices.

The GTA aggregate turnover limit GST for registration is the same as for other service providers.

GTA Billing under GST

The format and content of the GTA billing under GST depend on the mechanism.

• Under RCM: The GTA issues a consignment note and an invoice for the freight amount but does not charge GST on the invoice. They should clearly mention on the invoice that the GST is payable by the recipient under RCM as per Notification No. 13/2017-Central Tax (Rate).
• Under Forward Charge: The GTA issues a proper tax invoice that includes all the mandatory particulars of a GST invoice, including the GST rate (5% or 12%), the amount of GST charged, their GSTIN, and the GSTIN of the recipient (if registered).

While there isn’t a single rigid GTA invoice format GST prescribed, it must contain all the details required for a tax invoice under the GST rules.

E-way Bill Requirements for GTA

An E-way Bill is an electronic document generated on the GST portal for the movement of goods of value exceeding a specified threshold (currently Rs. 50,000 for inter-state movement and varying thresholds for intra-state movement as per state rules). The responsibility for generating an E-way Bill can lie with the consignor, consignee, or the transporter (which includes a GTA).

• If the consignor or consignee generates the E-way Bill, they can update the transporter details.
• If the consignor or consignee does not generate the E-way Bill, and the value of goods exceeds the threshold, the GTA is required to generate the E-way Bill before the commencement of the movement of goods.

Proper E-way Bill compliance is essential for the smooth logistics GST chain.

Annual Return Filing for GTA

A GTA registered under GST is required to file an Annual Return in Form GSTR-9 by the due date (currently 31st December of the following financial year). However, filing of GSTR-9 has been made optional for small taxpayers (with aggregate annual turnover up to Rs. 2 crore) for certain financial years. GTAs who have opted for the composition scheme (if applicable to them, though generally GTAs providing service are not eligible for the standard composition scheme) would file GSTR-9A.

GST Council Updates Relevant to GTA

The GST Council periodically reviews and clarifies provisions impacting GTAs. Recent updates include:

• Composite Supply Clarification: The Council has clarified that services like loading, unloading, packing, unpacking, transshipment, and temporary warehousing, when provided by a GTA in the course of transportation and where a consignment note is issued, are part of a composite supply and taxable at the same rate as the GTA service (5% or 12%).
• Exemption for Transport of Used Household Goods: The transport of used household goods for personal use has been exempted from GST.
• Exemption for Vehicle Hiring to a GTA: The service of hiring out a vehicle to a GTA has been exempted from GST.
• HSN/SAC Update: While not specific to GTA rates, general compliance updates regarding the mandatory reporting of 6-digit HSN/SAC codes for taxpayers above a certain turnover threshold (e.g., Rs. 5 crore) in GSTR-1 are relevant for GTAs operating under Forward Charge (using SAC 9965).

Staying updated with GST Council meeting updates on HSN Chapter 9965 and related notifications is crucial for businesses involved in goods transportation.

Conclusion

The provisions for GTA under GST are designed to streamline the taxation of goods transportation services. The option between RCM and Forward Charge provides flexibility, while specific exemptions offer relief for certain types of transport and smaller players. Understanding the GTA GST rate, the nuances of GTA Reverse Charge Mechanism (RCM), the requirements for GTA Forward Charge, correctly determining the Place of Supply, complying with E-way Bill and Annual Return requirements, and staying informed about GST Council updates is essential for both GTAs and the businesses that utilize their services to ensure proper GST compliance for GTA and accurate tax payments on freight charges and logistics GST.