What is the concept of Goods Transport Agency under GST?
We all know that transportation is the backbone of India's economy. It facilitates easy trade of goods by eliminating the hindrances of place. Most commonly, the goods transport takes place in India via roadways. As per the data shared by National Highways Authority of India (NHAI), around 65% of freight and 80% passenger traffic is commuted by road.
Thus, we see transportation is a crucial aspect of our economy. Any snag in the transportation sector can possibly disrupt the entire supply chain. This is the reason behind fuel price fluctuations having a momentous effect on the disruption of business.
Transportation of merchandise is mostly carried out by a local transporter or a courier agency. However, there is another important entity that undertakes this activity, and that is the goods transport agency or GTA.
Here, the concept of GTA (goods transport agencies) and the GST registration laws & provisions applicable to them will be discussed in detail.
#1. What is meant by a GTA?
The Finance Act, 1994 describes a Goods Transport Agency as an individual or entity who renders transport services by road and issues a consignment note.
#2. How is GTA defined as per GST laws?
As per the GST laws, the definition of a Goods Transport Agency GTA is as follows-
- A goods transport agency refers to any person or entity that provides service of transportation of goods by road and also issues consignment note, by whatsoever name called.
- Hence, we can see that issuance of the consignment note is an essential condition for the supplier of transport service to be considered a Goods Transport Agency or GTA.
#3. Why is consignment note important in case of a GTA?
If a consignment note has been issued by the transporter, it implies that the lien (i.e. the right to keep possession of property) of the goods has been handed over to the transporter and that the transporter has now become accountable for the safe delivery of the consignment to the consignee.
#4. Whether a GTA needs GST registration?
The provisions of GST registration are slightly different in case of a Goods Transport Agency. A GTA need not have to get a GST registration in case he is involved in the transportation of goods, wherein the total amount of GST is supposed to be paid by the purchaser under reverse charge.
In such a case, the GTA does not require a GST registration even if his turnover exceeds â‚¹20 lakhs.
#5. Who shall pay GST while transporting goods through GTA?
Very importantly, if a GTA is providing transport services for the goods to the certain businesses, recipient or consignee of the goods having the GST registration is liable to pay GST under reverse charge basis.
#6. Which type of businesses shall incur GST liability for GTA?
The following types of businesses entities that are the recipients of transport service are supposed to incur the GST liability under reverse charge for a Goods Transport Agency:-
Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or
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
- A co-operative society established by or under any law; or
- A person registered under the CGST, SGST, IGST or UTGST Acts or
- A corporate established, by or under any law; or
- A partnership firm whether registered or not under any law including association of persons; or
- An individual having GST registration as a casual taxable person.
#7. Whether GTA is liable to pay GST?
If the services of GTA are availed, the GTA has the option to pay GST @12% (6% CGST + 6% SGST) and avail ITC thereof.
But, if the GTA does not pay GST, this liability will fall on the recipients.
#8. What if recipients don’t fall in the above categories?
In case, the recipients do not come under the aforementioned categories, the GST liability shall fall on the GTA supplier only.
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