W.e.f. 18/07/2022, the drastic change come across Transport Sector (Road). In this article, we will understand the GST tax structure for transporters providing GTA (Goods Transportation Agency) services by road (in short, GST on GTA service).
Government has brought various provisions to make tax structure friendly to GTA service providers. However, this time, the effort of government becomes a headache for industry. There are so many situations on which GST Taxation depends for Transport Sector. It is a difficulty to keep a set of all things right for this unorganized sector.
Following points are already discussed in our another article:
- what will be the nature of supply, i.e. whether it is Inter-state supply or Intra-state supply ?
- what are the invoicing requirements for GTA ?
- when does the liability to pay tax arises (i.e. time of supply of service) ?
- what are various Service Accounting Codes (SAC) for GTA ?
Here we will discuss the changes in GST provisions :-
- whether supply is taxable under GST or not ?
- what will be the rate of tax ?
- who will be responsible to pay tax to government, whether it will be supplier or it will be recipient of service ?
Whether GTA supply is taxable under GST or not ?
First of all, we will understand the situations where GST will be applicable for GTA. As per general rule, GST will be applicable on every transportation service being provided to anyone in India.
However, government has provided some exemptions where GST will not be applicable, which are as follows:
- Services Provided to Unregistered persons. (i.e. to any person who is not registered under GST) N/N CGST-R-32-2017 w.e.f. 13.10.2017 and N/N IGST-R-33-2017 w.e.f. 13.10.2017 excluding followings receipients:-
- (a) any factory registered under or governed by the Factories Act, 1948(63 of 1948); or
- (b) any Society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
- (c) any Co-operative Society established by or under any law for the time being in force; or
- (d) any body corporate established, by or under any law for the time being in force; or
- (e) any partnership firm whether registered or not under any law including association of persons;
- (f) any casual taxable person registered under GST Laws
- Services by way of transportation of goods by road except the services provided by a goods transportation agency or a courier agency
- Services by way of giving on hire to a goods transport agency, a means of transportation of goods
- Services provided by a goods transport agency, by way of transport in a goods carriage of :-
(a) agricultural produce;
(b) goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees (Rs 1500/-); (c) goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty (Rs 750/- per consignment);
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipment’s.
- Services provided by a goods transport agency, by way of transport of goods in a goods carriage to followings which has taken registration under the GST Laws only for the purpose of deducting tax under Section 51 and not for making a taxable supply of goods or services :-
- a Department or Establishment of the Central Government or State Government or Union territory; or
- a local authority; or
- Governmental agencies
Before 18/07/2022, services under part load for Rs 750/- per consignment And, services under Full Load for Rs 1500/- per consignment were exempt from GST. However, this exemption now taken away.
What will be the rate of tax under GST for GTA Services?
With effect from 18/07/2022, the GST Tax Structure changed. Following is the new tax structure :-
|In case, GTA don’t want to pay GST at his end (i.e. RCM)||5 % without ITC|
|Where GTA opt to pay GST at his end (Forward Charge)|| 5% without ITC ; Or
12% with ITC
In GTA, rate of GST kept in lowest tax category of 5% subject to the condition that the GTA can’t claim input tax credits against any inward supplies used for business.
However, if any GTA want to claim ITC on its inward supplies, then, rate of tax will be 12%.
It is further clarified that during a financial year, a GTA service provider can opt for a single option only, either, it is forward charge or it is reverse charge. Both options can not go parallelly.
Further, under Forward Charge, only one option can be selected for a financial year, either it is with ITC or without ITC.
Conditions to opt for Forward Charge :-
The option by GTA to itself pay GST on the services supplied by it during a Financial Year shall be exercised by making a declaration in Annexure V on or before the 15th March of the preceding Financial Year:
The option for the Financial Year 2022-2023 shall be exercised on or before the 16th August, 2022. (Till date, neither form being provided on GST Portal nor any extension notified to opt for such option)
It is also provided that invoice for supply of the service charging GST under forward charge may be issued during the period from the 18th July,2022 to 16th August, 2022 before exercising the option for the financial year 2022-2023 but in such a case the supplier shall exercise the option to pay GST on its supplies on or before the 16th August,2022.
Declaration to be printed on Tax Invoice by GTA opting to pay under Forward Charge:-
I/we have taken registration under the CGST Act, 2017 read with clause (v) of section 20 of IGST Act, 2017and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year _____ under forward charge.
Who will be responsible to pay tax to government, whether it will be supplier or it will be recipient of service ?
As per general rule, supplier of service is liable to pay GST under forward charge.
However, for GTA, government has provided two systems i.e. Reverse charge mechanism or Forward Charge.
The option selected by GTA service provider will decide the responsibility of payment of GST to the government.
Where supplier has opted that he will not pay GST at his end, liability to pay GST to government shifted to recipient of services under Reverse Charge.
Where GTA supplier is an unregistered person, liability to pay GST to government shifted to recipient of services under Reverse Charge.
In case, a GTA service provider has charged opted to pay GST at his end, liability for payment of tax to government remains to such service provider only. Here, reverse charge provisions will not applicable on recipient of service.
Following is the list of recipients of service who will be responsible to pay GST under reverse charge where GTA opted not to pay GST at his end or is an Unregistered Person :
- 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 for the time being in force in any part of India
- Any co-operative society established by or under any law
- Any person registered under CGST/SGST/UGST Act
- Any body corporate established, by or under any law
- Any partnership firm whether registered or not under any law including association of persons
- Casual taxable person