GST on Good Transportation Agency (GTA) service has been very much confusing and controversial and in this note we’ll try to simplify same.
As per Notification No. 12/2017 dated 28 June 2017 Paragraph 1 Serial No. 18: Service by way of transportation of goods by road except the services of Goods Transport Agency and courier agency.
Lets’ first understand the meaning of GTA defined in the above notification which is as under:
Any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
Thus, from the above definition it is clear that issuance of a consignment note is the most important document for a supplier of service to be considered as a Goods Transport Agency but Consignment Note is also not defined in any of GST Acts, however reference may be drawn from Explanation to Rule 4B, Service Tax Rules, 1994, a “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, 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.
Now after clarifying the various definitions and background of GTA under GST, now let’s discuss on various options under which GST can be paid for GTA service which are as under:
Option 1: GST at 5% under RCM where service provider won’t be able to take ITC in relation to such supply and recipient of service can pay GST under RCM and take credit of same. If service is provided to several notified person. (As per notification 13/2017)
Option 2: GST at 5% under forward charge by service provider without ITC.
Option 3: GST at 12% under forward charge by service provider with ITC. Provided that once the GTA opt for paying GST at 12% he cannot opt for any of the above 2 option henceforth. (Notification 20/2017 Central Tax rate)
[The person notified in 13/2017 to pay GST under reverse charge are as under:
(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.]
Thus, from the above analysis it’s clear that once a GTA chooses to pay tax at 12% under forward charge he can neither pay tax at 5% in forward charge without ITC or at 5% under RCM.
However, GST rate on below mentioned GTA service shall be Nil as mentioned in circular 12/2017:
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
(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 equipments
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