Common mistakes made by Goods Transport Agency (GTA):
What is Goods Transport Agency?
"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.
In the above definition following Two Aspects need to be discussed to understand the scope of GTA services & responsibility.
1) "Service in relation to transport of goods by road" including used household goods for
personal use.
2) As per old Service Tax Rules, 1994"Consignment note" means document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.
Similar as above As per Rule 54(3) of CGST Rules states "Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage, the said supplier shall issue a tax invoice or any other document in lieu thereof, by whatever name called, containing the gross weight of the consignment, name of the consigner 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, Goods and Services Tax Identification Number of the person liable for paying tax whether as consigner, consignee or goods transport agency, and also containing other information as mentioned under rule 46.
GTA Services are Taxable Supplies or Exempted Supplies?
As per Section 7 Supply includes all form of supply of goods or services or both 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. Hence, GTA covered under supply.
However, as per Notification No. 12/2017-CT (Rate) - Exempted Supplies are :
1) Entry No. 18, Heading 9965 of Chapter 99
Services by way of transportation of goods -
a) by road except the service of-
i) Goods Transport Agency (GTA)
ii) a Courier agency
2) Entry No.21, Heading 9965 of Chapter 99
Services provided by a goods transport agency by way of transport in a goods carriage of-
a) agriculture produce.
b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed Rs,1500
c) goods where consideration charged for transport of all such goods for a single consignee does not exceed Rs. 750.
d) milk, salt and food grain including flour, pulses and rice.
e) organic manure.
f) newspaper or magazine registration with registrar of Newspaper.
g) relief material meant for victim of natural or man-made disasters, calamities, accidents or mishap or
h) defence or military equipments.
are exempt.
3) Entry No.21A, Heading 9965 of Amended Notification No. 12/2017-CT (Rate)
Services provided by a GTA to a unregistered person including an unregistered casual taxable person, other than the following recipients namely:
a) any factory registered under or governed by the Factories Act, 1948 or
b) 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 or
c) any Co-operative society established by or under any law for the time being in force or
d) any body corporation established by or under any law for the time being in force or
e) any casual taxable person registered under the CGST Act or IGST Act or SGST Act
are exempt.
4) Entry No. 22 of Notification No. 12/2017-CT (Rates) Amendment Dt.-25-01-2018
Under this
Services by way of giving on hire -
a) to state transport undertaking, a motor vehicle means to carry more than 12 passengers or
b) to a GTA, a means of transportation of goods or
c) motor vehicle for transportation of students, faculty and staff to a person providing services of transportation of students, faculty and staff ta an education institute providing services by way of pre-school education and education upto higher secondary school or equivalent.
are exempt.
Note:- If GTA provide hiring services to another GTA then it will cover under that exemption notification above.
Now, question is if GTA note covered under above exemption notification that what will be the rate applicable on it?
There are Three Options Available to GTA at the time of Registration under GST Act:
1) Providing services to Specified Categories Recipients - Applicability of Reverse Charge as per Notification No. 13/2017- CT (Rate) Dt.:28.06.2107.
2) Providing services other than Specified Categories Recipients - Forward Charge @ 5% without ITC - Notification No. 11/2017- CT (Rate)
3) Forward Charge with ITC availment - Forward Charge @12% availing ITC - Notification No.20/2017- CT (Rate).
Option 1) Providing Services to Specified Category Recipient – Applicability of Reverse Charge
As per Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017, Supply of Services by a Goods Transport Agency (GTA) in respect of transportation of goods by road to Specified Category Recipients are treated on Reverse Charge and the Recipient is Liable to pay GST.
(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; or
(d) 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; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person.
Under this Recipient is required to pay GST @ 5% on Reverse Charge Mechanism and of course the Recipient is allowed to take Input Tax Credit (ITC) subject to general eligibility criterion. Since GTA is not charging any GST, he is not entitled to any Credit.
Option 2) Services to other than Specified Category Recipient – Forward Charge @5% without ITC
As per Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, Supply of Services by a Goods Transport Agency (GTA) in respect of transportation of goods by road to Non-Specified Category Recipients, they can opt for @5% GST Rate Heading 9965 (9) (iii) or Heading 9967 of Chapter 99.
If, GTA opt this option they required to charge @5% GST from recipient of service. However, under this option GTA can not avail ITC on goods and services used in supplying the services.
Option 3) Forward Charging with ITC Availment – Forward Charge @12% by availing ITC
As per Notification No. 20/2017 – Central Tax (Rate) dated 22 August, 2017, GTA are now allowed to take Input Tax Credit subject to condition that they should charge GST @12% on forward charge. The recipient is also allowed to take credit subject to his eligibility. That means through this way seamless credit is ensured at the GTA end as well as at recipient’s side. However, Once this option to pay @ GST 12% and avail ITC is opted, then other Options can’t be exercised and thenceforth, GTA be liable to pay GST @ 12% on all the services of GTA supplied by it.
Note: If GTA select any one option of above then they can not exercised any other option.
Note: If GTA provide hiring services to any other GTA then it is exempt service under Notification No. 12/2017-CT (Rates) Amendment Dt.-25-01-2018.
Case – 1 : GTA Services only to Specified Category Registered Business – on RCM –
No Need to Register
Further as per Notification No. 5/2017- Central Tax dated 19/06/2017, which specifies that 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 said Act as the category of persons exempted from obtaining registration under the aforesaid Act.
That means if the GTA is making all his supplies only on reverse charge that is supplies to those specified category supplies as discussed above, then GTA is exempted from obtaining registration of GST.
Even though in case the GTA is supplying inter-state supplies, he is not required to register under above situation as Notification No. 5/2017- Central Tax dated 19/06/2017, is overriding General Clause u/s 24 of CGST Act (Compulsory registration in case of Inter-State supply).
Case – 2 : GTA Services to other than Specified Category Registered Business or Other than Exempted GTA Services – Need to Register Subject to Threshold Limit.
In case GTA is Providing Services to Categories other than Specified under Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017 & also Goods other than under Heading 9965 or Heading 9967 (Exempted Supply), then GTA is required to Register if the Threshold Limit of Rs 20 L (Rs 10 L for Special Category States) is crossed or making Inter-state Supply.
In case the threshold limit is less than Rs 20 L / 10 L as the case may be and also not making any inter-state supply, then GTA is not required to Register.
Case – 3 : Exempted GTA Services – Carrying only Specified Goods – No Need to Register
As per Notification No. 9/2017-Integrated Tax (Rate), the 28th June, 2017, Entry No : 22, Heading 9965 or Heading 9967 : Services provided by a Goods Transport Agency, by way of transport in a goods carriage of Specified Goods are Exempted. In case the GTA is engaged in exclusively carrying those supplies then he is not required to register by following Sec 23(1)(a) of CGST Act which stipulates that person supplying wholly exempted good or services : not be liable to registration.
That means GTA supplying exclusively to Specified Category Recipients on Reverse Charge (as per Notification No. 13/2017- Central Tax (Rate)) and / or exclusively carrying only Specified Goods (as per Notification No. 9/2017-Integrated Tax (Rate)) need not register.
Case – 4 : GTA Opting to Pay GST @ 12% & Avail ITC – Need to Register
In case GTA opt to pay GSt @ 12% and avail ITC as per Notification No. 20/2017 – Central Tax (Rate), then he supposed to be registered.
The GTA opting to pay GST @ 12% under this entry shall, thenceforth, be liable to pay GST @ 12% on all the services of GTA supplied by it”.
Some relaxation is provided to recipients getting supplies from un-registered. GST payable (under reverse charge) from unregistered persons exempted if the aggregate value of such supplies from all vendors does not exceed INR 5000 per day as per Notification : 8/ 2017 – Central Tax Rate, 28 June’17. This provision is made to exempt for small transactions up to Rs 5,000 per day.
Accordingly in case GTA is un-registered providing transport services to registered
person and the value of all such inward receipts by the recipient is less Rs 5,000 per day
then the recipient is not required to pay on reverse charge.
As per Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017, Supply of Services by a Goods Transport Agency (GTA) in respect of transportation of goods by road to Specified Category Recipients are treated on Reverse Charge and the Recipient is Liable to pay GST.
(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; or
(d) 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; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person.
Under this Recipient is required to pay GST @ 5% on Reverse Charge Mechanism and of course the Recipient is allowed to take Input Tax Credit (ITC) subject to general eligibility criterion. Since GTA is not charging any GST, he is not entitled to any Credit.
Option 2) Services to other than Specified Category Recipient – Forward Charge @5% without ITC
As per Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, Supply of Services by a Goods Transport Agency (GTA) in respect of transportation of goods by road to Non-Specified Category Recipients, they can opt for @5% GST Rate Heading 9965 (9) (iii) or Heading 9967 of Chapter 99.
If, GTA opt this option they required to charge @5% GST from recipient of service. However, under this option GTA can not avail ITC on goods and services used in supplying the services.
Option 3) Forward Charging with ITC Availment – Forward Charge @12% by availing ITC
As per Notification No. 20/2017 – Central Tax (Rate) dated 22 August, 2017, GTA are now allowed to take Input Tax Credit subject to condition that they should charge GST @12% on forward charge. The recipient is also allowed to take credit subject to his eligibility. That means through this way seamless credit is ensured at the GTA end as well as at recipient’s side. However, Once this option to pay @ GST 12% and avail ITC is opted, then other Options can’t be exercised and thenceforth, GTA be liable to pay GST @ 12% on all the services of GTA supplied by it.
Note: If GTA select any one option of above then they can not exercised any other option.
Note: If GTA provide hiring services to any other GTA then it is exempt service under Notification No. 12/2017-CT (Rates) Amendment Dt.-25-01-2018.
When GTA required to get registered under GST?
Case – 1 : GTA Services only to Specified Category Registered Business – on RCM –
No Need to Register
In case GTA is providing whole of his services to only those Specified Category Registered Businesses as specified in the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017, then the recipient is required to pay GST on Reverse Charge.
Further as per Notification No. 5/2017- Central Tax dated 19/06/2017, which specifies that 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 said Act as the category of persons exempted from obtaining registration under the aforesaid Act.
That means if the GTA is making all his supplies only on reverse charge that is supplies to those specified category supplies as discussed above, then GTA is exempted from obtaining registration of GST.
Even though in case the GTA is supplying inter-state supplies, he is not required to register under above situation as Notification No. 5/2017- Central Tax dated 19/06/2017, is overriding General Clause u/s 24 of CGST Act (Compulsory registration in case of Inter-State supply).
Case – 2 : GTA Services to other than Specified Category Registered Business or Other than Exempted GTA Services – Need to Register Subject to Threshold Limit.
In case GTA is Providing Services to Categories other than Specified under Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017 & also Goods other than under Heading 9965 or Heading 9967 (Exempted Supply), then GTA is required to Register if the Threshold Limit of Rs 20 L (Rs 10 L for Special Category States) is crossed or making Inter-state Supply.
In case the threshold limit is less than Rs 20 L / 10 L as the case may be and also not making any inter-state supply, then GTA is not required to Register.
Case – 3 : Exempted GTA Services – Carrying only Specified Goods – No Need to Register
As per Notification No. 9/2017-Integrated Tax (Rate), the 28th June, 2017, Entry No : 22, Heading 9965 or Heading 9967 : Services provided by a Goods Transport Agency, by way of transport in a goods carriage of Specified Goods are Exempted. In case the GTA is engaged in exclusively carrying those supplies then he is not required to register by following Sec 23(1)(a) of CGST Act which stipulates that person supplying wholly exempted good or services : not be liable to registration.
That means GTA supplying exclusively to Specified Category Recipients on Reverse Charge (as per Notification No. 13/2017- Central Tax (Rate)) and / or exclusively carrying only Specified Goods (as per Notification No. 9/2017-Integrated Tax (Rate)) need not register.
Case – 4 : GTA Opting to Pay GST @ 12% & Avail ITC – Need to Register
In case GTA opt to pay GSt @ 12% and avail ITC as per Notification No. 20/2017 – Central Tax (Rate), then he supposed to be registered.
The GTA opting to pay GST @ 12% under this entry shall, thenceforth, be liable to pay GST @ 12% on all the services of GTA supplied by it”.
Exemption from RCM to Recipient :
Some relaxation is provided to recipients getting supplies from un-registered. GST payable (under reverse charge) from unregistered persons exempted if the aggregate value of such supplies from all vendors does not exceed INR 5000 per day as per Notification : 8/ 2017 – Central Tax Rate, 28 June’17. This provision is made to exempt for small transactions up to Rs 5,000 per day.
Accordingly in case GTA is un-registered providing transport services to registered
person and the value of all such inward receipts by the recipient is less Rs 5,000 per day
then the recipient is not required to pay on reverse charge.
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