As we know, GST is going to make a historic change in the indirect taxation system in India w.e.f. 1 July 2017. It will impact almost all the sectors in the country whether with small affects or with larger one. 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)
Goods transporters are real backbone of the growth of trade and industry. They are wholly responsible for timely and safe delivery of goods from supplier to receiver. Logistic industry is primarily dependent on the GTA service providers. To empower them, government has brought various provisions to make tax structure friendly to GTA service providers.
In GTA, we will discuss following questions:
- whether supply is taxable under GST or not ?
- what will be the nature of supply, i.e. whether it is Inter-state supply or Intra-state supply ?
- 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 ?
- 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 ?
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
What will be the nature of supply, i.e. whether it is Inter-state supply or Intra-state supply?
To determine nature of supply, first step is to determine the place of supply in different situations. Place of supply is a decisive tool to decide the nature of supply, i.e. whether it is an Inter-state supply or Intra- state supply.
Location of Supplier/Receiver
Place of Supply
|1)||Services Provided by way of Transportation of Goods including by mail or courier where:
>> Location of service provider is in India and
>> Location of service receiver is in India
a) Where Service recipient is Registered Person :
Location of such recipient
b) Where Service recipient is Unregistered Person :
Location where such goods are handed over to transporter for transportation
Service provided in relation to transportation of goods (Other than by way of Courier or mail) where:
Either of :
>> Location of service provider is out of India
>> Location of service receiver is out of India (i.e. Location one of them must be out of India and the another of is within India)
|Place of destination of such goods
e.g. A transport company in India is providing services to a person in Australia for transportation of goods from India to Australia, then, place of supply of such goods will be Australia.
Once, place of supply is determined as per above principles, next step to determine the exact nature of supply. Following given are various situations and the corresponding nature of supply:
Type of Supply
Nature of Supply
|Where Location of the Supplier and Place of Supply are in :
> Two Different States
> Two different Union Territories
> One in a State and other in a UT
|Then supply shall be treated as Inter-state Supply. This transaction will be charged with IGST|
|Where Location of the Supplier and Place of Supply are in:
> Same State or Same Unit Territory
|Then supply shall be treated as Intra-state Supply. This transaction will be charged with SGST plus CGST or UGST|
> Location of Supplier of Service is in of India, and
> Place of supply of Service is out of India, and
> Location of Recipient of Service is out of India
It will be considered as Inter- state Supply. And it will be an export transaction (subject to further conditions of payments and distinct person).
> Location of Supplier of Service is out of India, and
> Place of supply of Service is within India, and
> Location of Recipient of Service is in India
It will be considered as Inter- state Supply. And it will be an import transaction.
|Supply to SEZ developer or SEZ Unit by Non-SEZ units
I.e. Location of Supplier is in India and place of supply to SEZ unit/developer
|It will be considered as Inter- state Supply:
Supply by Non-SEZ unit to SEZ unit will be considered as ZERO rated supply
What will be the rate of tax under GST for GTA Services?
|Services of goods transport agency (GTA) in relation to transportation of goods [other than used household goods for personal use]|| 5 % without ITC ; Or
12% with ITC (w.e.f 22.08.2017)
18% with ITC till 21.8.2017
|Services of goods transport agency (GTA) in relation to transportation of used household goods for personal use|| 5% without ITC ; Or
12% with ITC (w.e.f 22.08.2017)
18% with ITC till 21.8.2017
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%.
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 reverse charge mechanism under GST (same as of Service Tax), where liability to pay GST to government shifted from supplier of service to recipient of services.
However, such reverse charge is applicable where GTA service provider opts to charge tax @ 5% without claiming any ITC.
In case, a GTA service provider has charged GST @ 12% on the invoice value, liability for payment of tax to government remains to such service provider only. Here, reverse charge provisions will not applicable on recipient of service. CGST-R-22/2017
Following is the list of recipients of service who will be responsible to pay GST under reverse charge. If service receiver does not fall under any of category listed below, GTA himself will be responsible to pay GST to government:
- 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/SGCT/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
Example: If a GTA provides services to a company registered under Companies Act, however, does not registered under any of GST Acts. Who will be responsible to pay GST to government?
Answer: In this case, the company receiving services will be liable to pay tax under reverse charge mechanism.
What are the invoicing requirements under GST for GTA ?
As per general rule, a registered person supplying taxable services shall issue a tax invoice with following details:
- name, address and GSTIN of the supplier;
- a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolized as “-” and “/” respectively, and any combination thereof, unique for a financial year;
- date of its issue;
- name, address and GSTIN or UIN, if registered, of the recipient;
- name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered and where the value of taxable supply is fifty thousand rupees or more;
- HSN code of goods or Accounting Code of services;
- description of goods or services;
- quantity in case of goods and unit or Unique Quantity Code thereof;
- total value of supply of goods or services or both;
- taxable value of supply of goods or services or both taking into account discount or abatement, if any;
- rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
- amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
- place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce;
- address of delivery where the same is different from the place of supply;
- whether the tax is payable on reverse charge basis; and
- signature or digital signature of the supplier or his authorized representative.
In case of export of services, in lieu of details specified in clause (5) above, following details to be provided:
(i) name and address of recipient;
(ii) address of delivery; and
(iii) name of country of destination.
Along with details mentioned in point (1) to (16), tax invoice or any other document in lieu thereof issued by GTA should have following additional details:
- Gross weight of the consignment
- Name of the consignor and the consignee
- Registration number of goods carriage in which the goods are transported
- Details of goods transported
- Details of place of origin and destination
- GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency
The invoice, in case of taxable supply of services, shall be issued within a period of thirty days from the date of supply of service.
The invoice shall be prepared in duplicate, in case of supply of services, in the following manner:-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
When liability to pay tax does arises (time of supply of service) ?
The liability to pay tax on services shall arise at the time of supply. The time of supply of services shall be the earliest of the following dates :
- Where invoice is issued within 30 days from date of supply:
- the date of issue of invoice by the supplier or
- the date of receipt of payment,
whichever is earlier;
- Where invoice is not issued within 30 days from date of supply:
- the date of provision of service, or
- the date of receipt of payment,
whichever is earlier; or
- Where abovesaid both situations do not exists, the date on which the recipient shows the receipt of services in his books of account.
Where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount.
What are various Service Accounting Codes (SAC) for GTA?
SAC code is a unique code to particular service to make it distinct from other services. SAC code acts like an identification mark for a specific service.
For GTA service providers (via Road), there are two accounting codes provided in SAC chart:
996511: Used for Transportation Charges
9967 : Used for Support Services by GTA
SAC 996511 :- This code is used for only Road Transportation services for Goods including letters, parcels, live animals, household and office furniture, containers and the like by refrigerator vehicles, trucks, trailers, man or animal drawn vehicles or any other vehicles. This code is mainly used where only transportation service involved without any packing, storage, loading/unloading or any other support services. In case, transportation services are provided along with other support services, this code is used for Freight charges only. For other support services, one need to check another relevant code from series of SAC 9967.
SAC 9967:- This code is used for supporting services provided by GTA during transportation. There are following further sub-codes under SAC 9967. The supplier needs to choose relevant codes as per the support services being provided.
|Group 99671||Cargo handling services|
|996711||Container handling services|
|996712||Customs house agent services|
|996713||Clearing and forwarding services|
|996719||Other cargo and baggage handling services|
|Group 99672||Storage and warehousing services|
|996721||Refrigerated storage services|
|996722||Bulk liquid or gas storage services|
|996729||Other storage and warehousing services|
|Group 99674||Supporting services for road transport|
|996741||Bus station services|
|996742||Operation services of national highways, state highways, expressways, roads and streets; bridges and tunnel operation services|
|Group 99679||Other supporting transport services|
|996791||Goods transport agency services for road transport|
|996792||Goods transport agency services for other modes of transport|
|996793||Other goods transport services|
|996799||Other supporting transport services nowhere else classified|
Special Note for services providers as Packers and Movers:
Service Providers as packers and movers may use the code either 996719 or 996791 for all the other services being provided other than transportation during their service. There is no specific reference provided by lawmaker till date for Packers and Movers.
In the year 2008 when Service Tax was applicable, Government, through its circular vide M.F. (D.R.) letter D.O. F.No.334/1/2008-TRU dated 29/2/2008 on Cargo Handling Services has clarified that the –
1. Cargo handling service does not cover mere transportation of goods. Mere transportation of goods by road is covered under ‘Goods transport agency service”. Service providers, commonly known as packers and movers provide services of packing together with transportation, with or without other services like unpacking, loading, unloading etc. Such composite services, at present, are classifiable under cargo handling service or goods transport agency service depending upon their essential or predominant character of the services provided.
2. Section 65(23) which defines cargo handling service is being amended so as to include services of packing together with transportation of cargo or goods, with or without one or more other services like loading, unloading, unpacking, under cargo handling service. With this amendment, packing with transportation will be classifiable under cargo handling service only.
As per above circular, SAC 996719 may be used for all the services from Transportation to Packing/Unpacking, Loading/Unloading, etc.
Alternatively, to remove any ambiguity/confusion for the time being and for the sake of simplicity, following codes for the billing of Packers and Movers may also be used:
996511 : For Freight Charges
996791 : For all other Support Services
Tax rate structure will be same in both the cases.
Question 1: I am a single truck owner-operator and I ply my truck mostly between States, carrying the goods booked for my truck by an agent; aggregate value of service which I provided exceeded twenty lakh rupees during last year. Am I supposed to take registration?
Answer: 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 28th June, 2017 refers.
Question 2: 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?
Answer: 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 28th June, 2017.
Question 3: In my truck, I only carry fruits and vegetables, in relation to whose transportation service GST is exempt; should I take registration?
Answer: 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 28th June, 2017 and thus you are not liable for registration.
Question 4: 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?
Answer: 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).
Question 5: As a transporter, am I required to maintain any records of my services of transportation?
Answer: 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, in terms 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.
Question 6: 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.
Answer: 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.
Question 7: 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.
Answer: Yes, a GTA providing service in relation to transportation of goods by road under RCM can avail of the benefit of this exemption.
Question 8: 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.
Answer: No, because the business entity is not engaged exclusively in the supply of services liable to tax under reverse charge mechanism.
Question 9: 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?
Answer: 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.
Question 10: 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.
Answer: Yes, input tax credit is available in such cases.
Question 11: 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.
Answer: Services by way of giving on hire to a GTA, a means of transportation of goods are exempt from GST under Notification number 12/2017-Central Tax (Rate) dated 28th June 2017. When the tax is not payable, the question of taking any tax credit does not arise.
By this, we have understood the specific provisions of GST applicable to GTA sector. For other provisions like Reverse Charge Mechanism, E-way bill, etc., please refer our other articles.