Goods Transport Agency (GTA) under GST
Goods Transport Agency (henceforth called as GTA) is not defined anywhere in the CGST Act, 2017, However, as per Explanation to Entry 9 of CGST Notification 11/2017 Central Tax Rate (henceforth called CTR), 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.
CGST Notification No. 13/2017 (CTR) covered supply of Services in relation to transportation of goods by GTA under Reverse Charge.
As per CGST Notification 5/2017 (Central Tax) the persons who are only engaged in making supplies of taxable services, 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 are exempted from obtaining registration under the aforesaid Act. Thus, a GTA supplying taxable services wholly liable to tax under Reverse Charge, is exempted from obtaining Registration under GST.
As per CGST Notification No. 11/2017 (CTR), Intrastate supply of Transportation of goods by GTA shall be chargeable to GST at the rate of 5% (2.5% CGST & 2.5% SGST) without GTA being entitled to claim ITC on inward supplies, which was again amended by CGST Notification No. 20/2017 (CTR) dated 22.08.2017 thereby providing an option to GTA for paying GST under Forward Charge at the rate of 12% (6% CGST & 6% SGST) with entitlement to claim ITC on inward supplies. Thus, reading CGST Notification No. 13/2017 (CTR) with CGST (CTR) Notification No. 11/2017 & 20/2017, It can be concluded that GTA has an option to pay GST @ 12% (6% CGST & 6% SGST) under Forward Charge or its services in relation to transportation of goods may continue to be liable to tax under Reverse Charge. GTA paying tax under Forward Charge will continue to be liable to pay equivalent rate of tax on all support services provided by it in respect of transportation of goods.
As per CGST Notification No. 22/2017 (CTR), Services of GTA, who is not paying tax at the rate of 12% (6% CGST and 6% SGST), in respect of transportation of goods shall be liable to tax under Reverse Charge.
It is important to note that recipient paying tax in respect of supply of services in relation to transportation of goods by GTA, shall be eligible to claim ITC in respect of tax paid by him under Reverse Charge.
Further, as per Sec 24 of CGST Act, persons required to pay tax under Reverse Charge as per Sec 9(3) and Sec 9(4) shall be required to be registered.
Recipient of Service has been defined under Section 2(93) of CGST Act, 2017 “recipient” of supply of goods or services or both, means—
Consideration: (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration;
No Consideration:
For Goods: (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and
For Services: (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied.
As per GST Notification 13/2017 (CTR) related to reverse charge, Supply of Services by a goods transport agency (GTA) in respect of transportation of goods by road to the following shall be levied to GST under reverse charge by recipient of service:
- Registered Factory
- Registered Society/ co-operative society
- Registered person under CGST/ SGST/UTGST/IGST Act
- Body Corporate
- Partnership Firm/AOP, whether or not registered
- Casual Taxable Person
Further, as per CGST (CTR) Notification No. 32/2017 dated 13.10.2017, Services by GTA to Unregistered person including unregistered casual taxable person are exempt from tax.
Certain Issues to be resolved via this article are explained as follows:
Issue 1: GTA services in respect of transportation is liable under Forward Charge or Reverse Charge or both?
Answer: As per above mentioned provisions and relevant notifications, GTA Services in respect of transportation of goods are liable for tax under Reverse Charge only if GTA opts not to pay tax under Forward Charge. In case, GTA opts to pay GST under Forward Charge then Recipient would not be required to pay tax under RCM. It is interpreted from above provisions that both Forward Charge and Reverse Charge shall not prevail simultaneously.
Issue 2: What rate are prevalent in case of Forward Charge and Reverse Charge?
Answer: In case GTA opts to pay tax under Forward Charge, rate of 12% (6% CGST and 6% SGST) shall rest, with eligibility of GTA to claim ITC on inward supplies.
In case GTA opts not to pay tax under Forward Charge then recipient will continue to be liable to pay GST at the rate of 5% (2.5% CGST and 2.5% SGST) under Reverse Charge.
Further, GTA services in relation to transportation of certain goods as notified by government are exempt.
Issue 3: What provisions are applicable in case GTA provides support services like Warehousing etc. additionally with transportation of goods?
Answer: In case, GTA is engaged in providing support services, GTA shall be liable to pay GST as follows:
- If GTA pays tax under Forward Charge, rate of 12% (6% CGST and 6% SGST) shall prevail in respect of support services.
- Where GTA opts not pay tax under Forward Charge, rate of 5% shall prevail in respect of support services.
Issue 4: What will be the Implication where transportation vehicles used by GTA are not owned rather than taken on hire or lease from a third person?
Answer: Reading the explanation to entry 9 of CGST Rate Notification 11/2017 (CTR) it can be interpreted that GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. There is no specific requirement in relation to ownership of transportation vehicles by GST.
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