1. What service of transportation of goods is exempt under GST?

In terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (sr. no.18), the following services are exempt from GST:

Services by way of transportation of goods (Heading 9965):

(a) by road except the services of:

(i) a goods transportation agency;
(ii) a courier agency;

(b) by inland waterways.

Therefore, the service of transportation of goods by road continue to be exempt even under the GST regime. GST is applicable only on GTA & Courier agency.

2. Who is a GTA (Goods Transport Agency)?

As per clause (ze) of notification no.12/2017-Central Tax (Rate) dated 28.06.2017, “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.

Point to be Noted

  • A consignment note is an essential condition to be considered as a GTA.
  • If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of GTA. So, as per entry at s.no.18 of notification no.12/2017-Central Tax (Rate), which is exempt from GST.
  • If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till its safe delivery to the consignee. It is only the services of such GTA,
3. Significance of the term ‘in relation to’ in the definition of GTA

The use of the phrase ‘in relation to’ has extended the scope of the definition of GTA. It includes not only the actual transportation of goods, but any intermediate/ancillary service provided in relation to such transportation, like:

  • Loading/unloading,
  • Packing/unpacking,
  • Trans-shipment, temporary warehousing, etc.

If above these services are included and not provided as independent activities, then they are also covered under GTA.

4. What is a consignment note?

Consignment note means a 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.

A consignment note is serially numbered, and contains-

  • 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 to pay GST whether consignor, consignee or the GTA.
5. Rate of GST on services provided by GTA

In terms of notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by notification no. 20/2017- Central tax (Rate) dated 22.08.2017 , sr.no. 9 and sr. no. 11 (i):

ParticularsGST RateITC Availability or Not
(i) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use)5%Provided that credit of input tax charged on goods and services used in supplying the
service has not been taken
{Please refer to Explanation No. (iv)}
(i) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use)12%Provided that the goods transport agency opting to pay central tax @6% under this entry shall, thenceforth, be liable to pay central tax @ 6% on all the services of GTA supplied by it.
(ii) Supporting services in transport other
than (i) above.

Explanation (iv)- For the purposes of this notification,-

(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and

(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of section 17(2) of the CGST Act, 2017 and the rules made there under.

6. GTA services specifically exempt
  • In terms of notification no.12/2017-Central Tax (Rate) dated 28.06.2017 (sr. no.21), the following services provided by a GTA (Heading 9965 or 9967) is exempt from payment of tax:

Services provided by a goods transport agency, by way of transport in a goods carriage of:

(a) agricultural 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 transportation 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 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.

  • Similarly, the following services received by the GTA (Heading 9966 or 9973) is 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 :
(b) to a 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.

7. Is a GTA liable to register?
  • There was a lot of confusions whether a GTA has to register under GST.
  • As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is engaged in making only supplies of taxable goods/services on which reverse charge applies is exempted from obtaining registration under GST.
  • Thus, a GTA does not have to register under GST if he is exclusively transporting goods where the total tax is required to be paid by the recipient under reverse charge basis (even if the turnover exceeds 20 lakhs).
8. Person Liable to Pay GST under under Reverse charge on GTA services

As per Notification No. 13/2017- Central Tax dated 28/06/2017 the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the receiver of service. Accordingly receiver of the service liable to pay GST under RCM.

The following businesses (recipient of services) is required to pay GST under reverse charge:-

(a) Any factory registered under Factories Act, 1948;
(b) any society registered under the Societies Registration Act, 1860 or under any other law;
(c) any co-operative society established by or under any law;
(d) any GST registered person;

(e) any body corporate established, by or under any law;
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any casual taxable person.

Point to be Noted:

  • Thus in cases where services of GTA are availed by the above categories of persons in the taxable territory the GTA supplier has the option to pay tax @12% and avail ITC ; and if the GTA does not avail this option, the liability to pay GST will fall on the recipients.
  • In all other cases where the recipients do not fall in the categories mentioned above, the liability will be on the supplier of GTA services.
  • Where the GTA is not eligible to take ITC for the supplies effected by it and the liability under GST is discharged under reverse charge basis, the recipient of GTA service discharging the tax liability is entitled to take Input Tax Credit (ITC) of the amount of tax paid under reverse charge, provided it is used in the course or furtherance of business at his end.
  • Further the recipient would be eligible for ITC of the GST paid by GTA on forward charge basis.