Goods Transport Agency under GST

What is Goods Transport Agency (GTA)

Under GST, ‘Goods Transport Agency’ means any person engaged in providing service in relation to transportation of goods by road and also issues a consignment note, by whatever name called. Goods Transport Agency under GST comes with latest amendment are going to discuss in descriptive manner what are they?

Following two important amendments are introduced and made effective from 18th July 2022 under Goods Transport Agency (GTA) –

  • Withdrawal of exemption in respect of Goods Transport Agency Services; and
  • GST taxability in respect of Goods Transport Agency Services under GST.

Both the amendments are taken up and explained in the current article.

Goods Transport Agency under GST : Withdrawal of Exemption

Withdrawal of Exemption

Before going into complicated amendments, let us first go through the easy going amendment.

Earlier provisions as effective till 17th July 2022 –

Notification no. 12/2017- Central Tax (Rate) dated 28th June 2017 covers the list of exempted services. As per sr. no. 21 of the said notification following services provided by GTA, by way of transport in a goods carriage were exempt under GST –

  1. Where consideration charged for goods transportation on a consignment transport in a single carriage doesn’t exceed INR 1,500; or
  2. Where consideration charged for goods transportation for a single consignee doesn’t exceed INR 750.

Amendment as effective from 18th July 2022 –

Vide notification no. 04/2022- Central Tax (Rate) dated 13th July 2022, both the above exemptions were omitted. Meaning thereby that, from 18th July 2022, exemption of single carriage consignment up to INR 1,500 and/ or single consignee up to INR 750 is withdrawn.

In nut-shell, from 18th July 2022, any value of supplies by Goods Transport Agency will be liable for taxation (either under forward charge or under reverse charge under GST.

What is GST Rate Applicable To GTA

Goods Transport Agency under GST Applicability

Following two notifications are important for deciding the taxability in respect of Goods Transport Agency –

  1. Notification no. 11/2017- Central Tax (Rate) dated 28th June 2017 which provides rates of GST;
  2. Notification no. 13/2017- Central Tax (Rate) dated 28th June 2017 which covers the applicability of the RCM under GST.

According to sr. no. 9 of notification no. 11/2017- Central Tax (Rate) dated 28th June 2017, GST @5% (2.5% CGST + 2.5% SGST) is payable in case the input tax credit on goods and services used in supplying the service has not been availed.

Who Will Liable To Pay Reverse Charge  

Notably, as per notification no. 13/2017- Central Tax (Rate) dated 28th June 2017, reverse charge mechanism gets applicable when the services were provided to the following specified service recipients - 

  1. Factory as registered under the Factory Act, 1948;
  2. Society as registered under the Societies Registration Act, 1860 or under any other law;
  3. Any co-operative society;
  4. Any person registered under Goods and Services Tax;
  5. Body corporate;
  6. Partnership firm [including the association of person (AOP)];
  7. Casual taxable person.

Please note that the above seven service recipients are referred to as ‘specified service recipients’ hereunder.

More on reverse charge mechanism we briefly explain RCM applicability and procedure for payment voucher under RCM, how to prepare payment voucher? and more.

What is GST taxability for GTA till 17th July 2022

Manner of provision of service

Particulars

Availability

Services provided by Goods Transport Agency to recipients other than specified services recipients

GST charged @5% by Goods Transport Agency under Forward charge; or
 
GST charged @12% by GTA under Forward charge.

When GST is charged @5% the input tax credit on goods and services used in supplying the service is not available to GTA.

When GST is charged @12% the input tax credit on goods and services used in supplying the service is available.

Services provided by Goods Transport Agency to specified services recipients

GST is payable by the service recipients at @5% under the reverse charge mechanism

Input tax credit will not be available to GTA.

What are Latest Amendments in GTA 

Goods Transport Agency Service under GST & reverse charge

The following table briefs the amendments introduced in Goods Transport Agency as effective from 18th July 2022

Amending notification

Particulars

Notification no. 03/2022- Central Tax (Rate) dated 13th July 2022

Amended GST rate notification no. 11/2017- Central Tax (Rate) dated 28th June 2017

Notification no. 05/2022- Central Tax (Rate) dated 13th July 2022

Amended reverse charge notification no. 13/2017- Central Tax (Rate) dated 28th June 2017

As per notification no. 03/2022- Central Tax (Rate) dated 13th July 2022, GTA will have the following options for payment of GST –
Option 1 – Goods Transport Agency opts to pay GST under Forward charge; and
Option 2 – Goods Transport Agency service doesn’t opt to pay GST under Forward charge.

Option 1

Accordingly, if the Goods Transport Agency exercises the Option 1 and decides to pay GST under the Forward charge. Then, in such a case, the GTA can pay GST under either of the following methods

Method 1Goods Transport Agency can pay GST @5% – importantly, here, the input tax credit will not be available to Goods Transport Agency; or  

Method 2Goods Transport Agency can pay GST @12% – here, the input tax credit will be available to Goods Transport Agency

Steps to be followed by GTA for exercising option 1

  • Option is to be exercised by filing a declaration in Annexure V [please note Annexure V is available in notification no. notification no. 03/2022- Central Tax (Rate) dated 13th July 2022];
  • Such declaration in Annexure V is to be filed on or before 15th March of the preceding Financial Year;
  • For exercising the option in the current Financial Year i.e. 2022-2023, the GTA is required to file a declaration in Annexure V on or before 16th August 2022.

Option 2

However, if the GTA exercises Option 2 and decides not to pay GST under the Forward charge. Then, in such case, GST @5%, on services received from Goods Transport Agency, will be payable by the following specified service recipient

  1. Factory as registered under the Factory Act, 1948;
  2. Society as registered under the Societies Registration Act, 1860 or under any other law;
  3. Any co-operative society;
  4. Any person registered under Goods and Services Tax;
  5. Body corporate;
  6. Partnership firm [including the association of person (AOP)];
  7.  Casual taxable person.
Applicability of reverse charge when GTA opts to pay GST under Forward charge (i.e. under option 1) –

Notification no. 05/2022- Central Tax (Rate) dated 13th July 2022 has amended the reverse charge applicability under Goods Transport Agency. Accordingly, with effect from 18th July 2022, the position of reverse charge will be –

Circumstances

Reverse Charge Applicability/ Non-applicability

  • Goods Transport Agency has obtained GST registration;
  • GTA has opted to pay GST under forward charge;
  • Goods Transport Agency service has issued a tax invoice to the service recipient charging GST; and
  • GTA has made a declaration (as per Annexure III of the said notification no. 05/2022) on the tax invoice.

When all the conditions are satisfied, the reverse charge will not be applicable even to the specified service recipient.

  • Goods Transport Agency doesn’t opt to pay GST under Forward Charge

The reverse charge will be applicable when the services are provided to any of the following service recipients –

  1. Factory as registered under the Factory Act, 1948;
  2. Society as registered under the Societies Registration Act, 1860 or under any other law;
  3. Any co-operative society;
  4. Any person registered under Goods and Services Tax;
  5. Body corporate;
  6. Partnership firm [including the association of person (AOP)];
  7.  Casual taxable person.

Goods Transport Agency Services Amendments in Simple Way

The following points will simplify the complicated amendment in respect of Goods Transport Agency Services –

GST on Goods Transport Agency Service up to 17th July 2022

Forward Charge Basis

  • GST charged by Goods Transport Agency @ 12% or 5%;
  • Input tax credit available to Goods Transport Agency only when GST charged @ 12%.

Reverse Charge Basis

  • GST payable @ 5% by the specified service recipient;
  • Input tax credit not available to Goods Transport Agency.

GST on Goods Transport Agency Service up to 17th July 2022

Forward Charge Basis

  • GST can be paid either @ 12% (with input tax credit) or @ 5% (without availing input tax credit);
  • Option is to be exercised on or before 15th March of the preceding Financial Year;
  • Specified service recipient are not required to pay GST on reverse charge basis as GST is already charged and paid by GTA;
  • Input tax credit is available to Goods Transport Agency only if GST is charged @12%.

Reverse Charge Basis

  • GST @5% will be payable by the specified service recipient under reverse charge mechanism;
  • Input tax credit is not available to Goods Transport Agency.

Notably, in all the above cases, the input tax credit is available to the service recipient provided all the other input tax credit conditions are satisfied.

reconciliation
Claim upto 100% Input Tax Credit

Easiest GSTR 2B Reconciliation With Reverse ERP Integration

  • Identify defaulting suppliers 
  • 100+ validation checks for each invoice
  • Accurate GSTR 2A reconciled with purchase
  • Get every month’s GSTR-2A within seconds

CA Poonam Gandhi

About the author

Poonam Gandhi is a Chartered Accountant and a Lawyer. She is a Professional Freelance Content Writer/ Editor and an Educator.

She masters in creating result-oriented as well as Search Engine Oriented Content. Currently, she is associated with some of the topmost leading sites of India.

She holds more than 3 years of experience in the content field. Before entering the content writing field, she possessed a wide practice experience of more than 9 years, specifically, in the field of Indirect Taxation.

Follow us: