GST Rate on Transport
Road transport is the most common and convenient form of goods transport. More than 80% of passengers and 65% of freight traffic is carried by road, as reported by the National Highways Authority of India. A courier agency or goods transport agency is responsible for the transportation of goods. In this article, we will discuss the GST rate on transport of goods by road.
Services of Goods Transport Exempt under GST
By way of goods transportation, the services exempted –
- By road excepting services rendered by
- A courier agency
- A transport agency
- By inland waterways
Hence, the goods transport service by road keeps on being exempted under the GST regime. GST rate on goods transport agency (GTA) is applicable.
What is GTA (Goods Transport Agency)?
A Goods Transport Agency (GTA) can be an individual who issues consignment note and serves by transporting goods by road. Others may hire vehicles for the supply of goods. But GTA is the one who issues a consignment note. Hence, it is important to issue a consignment note to be called GTA, according to Notification 11/2017-Central Tax (Rate) dated. 28th June, 2017
About Consignment Note
A Goods Transport Agency issues a document named “consignment note” for receipt of goods to transport the goods in a vehicle by road. GTA shall not cover the service provider if consignment note is not issued by a transporter. The lien on goods is given to the transporter after issuing the consignment note. The transporter is now liable for the safe transportation of goods. A consignment note has serial number along with other details like –
Name of consignor and consignee
- Details of goods
- Registration number of vehicles transporting the goods
- Place of origin
- Place of destination
- GTA, consigner, or consignee who is liable to pay GST
Services offered by GTA
Along with the transportation of goods, the goods transport agency is also responsible for ancillary/intermediate services like –
- Temporary warehousing and more
If these services are not offered as individual activities and included, they should be offered by GTA.
What about Service Tax?
The service tax covers RCM. For transportation of used goods, there was an abatement of 60%. For transporting common goods, there was a 70% abatement.
Does GTA need to Register?
Whether a GTA is liable for GST registration is a matter of debate. A person who is responsible to supply only taxable services/goods with reverse charge is applicable is exempted from GST registration, according to Notification 5/2017-Central Tax 19/06/2017.
Hence, GTA is not liable for GST registration if he is transporting goods exclusively, where total tax should be paid by the recipient on the basis of reverse charge.
Who needs to pay GST when hiring a Goods Transport Agency?
If services are offered by GTA to any recipients, GST under reverse charge shall be paid by the recipient of services.
GST under Reverse Change – Who is liable to pay?
Here are the recipients of services (businesses) who are liable to pay GST –
- A GST registered individual
- A Factories Act 1948 registered factories
- A society which is registered under any law or Societies Registration Act, 1860
- A co-operative society which is legally established
- Any taxable person
- A corporate body which is established legally or by the law, or
- A registered or unregistered partnership firm
Who is liable to pay GST under Reverse Charge?
The person who needs to pay the freight for goods transport by road shall be considered as a recipient of service, according to Notification 13/2017 – Central Tax dated. 28/06/2017. He should transport goods in goods carriage in the taxable territory.
If consigner or supplier of goods pays GTA, the sender will be considered recipient. If a sender belongs to the above category, he will be liable to pay GST on reverse charge.
If the consignee (receiver) is liable for payment of freight, the receiver of goods will be considered as receiver of transport services. If the receiver belongs to the above category, he will be liable to pay GST on reverse charge.
What if GTA is not Registered?
If the intra-state supplies or services don’t exceed Rs. 5000 per day and are received by a person who is registered from any supplier who is not registered, the supplies will be exempted from GST, according to Notification 32/2017 – Central Tax (Rate) dated. June 28, 2017. However, the notification has been cancelled by the government. Hence, RCM is applicable to unregistered purchases for specified supplied, which should be notified.
About Input Tax Credit
If the Goods Transport Agency pays GST, they have two choices –
- They can pay 12% GST with ITC, or
- They can pay 5% GST without ITC
According to the Notification 20/2017- Central Tax (Rate) August 22, 2017, the GTA should opt at the start of the fiscal year.
If GST is paid by receiver of services under RCM, he can always get ITC on GST which has been paid under RCM.