GST on GTA / GST on Goods Transport Agency : In-depth Analysis

By | August 9, 2017
(Last Updated On: August 9, 2017)

GST on GTA /GST on Goods Transport Agency

In depth Analysis of GST on GTA services as per GST act of India w.e.f 01.07.2017GST on GTA /GST on Goods Transport Agency

GST Service classification heading for Goods Transport Services is 9965. The groups in this heading are

  • Land transport services of goods (99651),
  • water transport services of goods (99652)
  • Air and space transport services of goods (99653).

Goods Transport by Road

Meaning of GTA for GST

As per Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017, effective from 1-7-2017 : Services by way of transportation of goods by road  are exempt from GST except following services of

(i) a goods transportation agency

(ii) a courier agency

Thus, all transport of goods by road is exempt from GST except in case of GTA and courier services.

Goods Transportation Agency : “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; para 2(ze) of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017, effective from 1-7-2017.

Judgment on GTA : -In Northern Coal Fields v. CCE (2016) 53 GST 138  assessee was providing service of transport of coal within mines. No consignment note was issued. Hence, it was held that it is not GTA service and not taxable.

Courier Agency – “Courier agency” means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles – para 2(u) of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017, effective from 1-7-2017.

Rate of GST on GTA

The GST rate in case of service provided by GTA is 5% (CGST 2.5% and SGST 2.5%) or IGST 5%. ITC of input services or goods is not available to GTA – [ Refer Sr No 9 of table of  Notification No. 11/2017-Central Tax (Rate)  dated 28-6-2017 and Sr No 9 of table of Notification  No. 8/2017-Integrated Tax (Rate) dated 28-6-2017, effective from 1-7-2017]

GST Input tax Credit on GTA Services

The  condition of non-availment of ITC is applicable where GTA himself is liable to pay tax and not where the recipient is liable to pay GST under reverse charge. Thus, if the recipient pays GST @ 5% (2.5% plus 2.5%) on reverse charge basis, he can avail its input tax credit.

 GST on Reverse charge basis in respect of GTA services

Effective from 1-7-2017  ,the recipient of service located in taxable territory is liable to pay GST in case of supply of Services by a goods transport agency (GTA) in respect of transportation of goods by road to-

(a) any factory registered under or governed by the Factories Act, or

(b) any society registered under the Societies Registration Act, 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 (“Body Corporate” has the same meaning as assigned to it in section 2(11) of the Companies Act, 2013) or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person located in taxable territory

[ Refer Sr No 1 of Table of Notification No. 13/2017-Central Tax (Rates) dated 28-6-2017 and Notification No 10/2017-Integrated Tax (Rates)  dated 28-6-2017, effective from 1-7-2017 ]

Note : The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

[ Refer explanation (a)  of Notification No. 13/2017-Central Tax (Rates) dated 28-6-2017 and Notification No 10/2017-Integrated Tax (Rates)  dated 28-6-2017, effective from 1-7-2017 ]

GST on Forward charge basis in respect of GTA services

GTA itself is liable to pay GST only in following cases –

(a) when recipient of service is unregistered individual person

(b) transportation of household goods when the freight is paid by unregistered individual person and not when the employer (company or firm) itself is paying the freight

(c) Services supplied to person located outside taxable territory (like transport to Bhutan, Nepal, Bangladesh) where the recipient is paying freight and not when Indian party supplying goods is paying freight.

 No GST on GTA Services for transportation of specified goods

Services provided by a goods transport agency, by way of transport in a goods carriage of following are exempt from GST –

(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

[ Refer Sr No 21 of table of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017 effective from 1-7-2017.]

GST  Exemption to service of giving vehicles on hire to GTA

Services by way of giving on hire to a goods transport agency, a means of transportation of goods is exempt from GST -[ Refer Sr No 22 of Table of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017 ]

Thus, there is no GST on vehicles given to GTA on hire (because many GTA do not have their own vehicles).

GST on Transport of goods by Rail

Rail transport service of goods falls under tariff (service code) 996512.

GST Rates on Transport of goods by Rail

The GST rate is 5% (CGST 2.5% and SGST 2.5%) or IGST 5%. ITC of input service is available but not of input goods.[ Refer Sr No 9 of table of  Notification No. 11/2017-Central Tax (Rate)  dated 28-6-2017 and Sr No 9 of table of Notification  No. 8/2017-Integrated Tax (Rate) dated 28-6-2017, effective from 1-7-2017]

GST Exemption to Service of goods transport by vessel or rail within India

Services by way of transportation by rail or a vessel from one place in India to another of the following goods is exempt from GST –

(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap

(b) defence or military equipments

(c) newspaper or magazines registered with the Registrar of Newspapers

(d) railway equipments or materials

(e) agricultural produce

(f) milk, salt and food grain including flours, pulses and rice; and

(g) organic manure

[ Refer Sr No 20 of table of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017 effective from 1-7-2017.]

GST on Water transport service of goods

Water transport service of goods falls under group 99652.

GST Rates on Water Transport Service

The GST rate is 5% (CGST 2.5% and SGST 2.5%) or IGST 5% on transportation of goods in a vessel. ITC of input service is available but not of input goods. However, ITC of GST paid on ships, vessels including bulk carriers is available. [ Refer Sr No 9 of table of  Notification No. 11/2017-Central Tax (Rate)  dated 28-6-2017 and Sr No 9 of table of Notification  No. 8/2017-Integrated Tax (Rate) dated 28-6-2017, effective from 1-7-2017]

GST Exemption to transport of goods by inland waterways 

Transport of goods by inland waterways is exempt from GST – [ Refer Sr No 18 of table of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017 effective from 1-7-2017.]

“Inland waterway” means national waterways as defined in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985 (82 of 1985) or other waterway on any inland water, as defined in clause (b) of section 2 of the Inland Vessels Act, 1917 (1 of 1917). [ Refer point 2(zi) of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 ]

Meaning of National waterway

The National Waterways Act, 2016 has been passed. This Act has been notified and made effective on 11-4-2016.

Total 111 National Waterways have been declared under this Act w.e.f. 12-4-2016.

Section 2(h) of Inland Waterways Authority of India Act, 1985 (as amended by The National Waterways Act, 2016) defines the words ‘national waterway’ as follows :

‘National waterway’ means the inland waterway declared by section 2 of the National Waterways Act, 2016 to be a national waterway.

Explanation – If Parliament declares by law any other waterway to be a national waterway, then from the date on which such declaration takes effect, such other waterway— (i) shall be deemed also to be a national waterway within the meaning of this clause; and (ii) the provisions of this Act shall, with necessary modifications (including modification for construing any reference to the commencement of this Act as a reference to the date aforesaid), apply to such national waterway.

Meaning of ‘Inland water’

Section 2 of the Inland Vessels Act, 1917 Act defines the words ‘inland water’ as follows :—

‘inland water’ means—

(i) any canal, river, lake or other navigable water within a State

(ii) any area of any tidal water deemed to be the inland water as defined by the Central Government under section 70

(iii) waters declared by the Central Government to be smooth and partially smooth waters under clause (41) of section 3 of the Merchant Shipping Act, 1958;

Section 3(ga) of the Inland Vessels Act, 1917 defines the word ‘tidal water’ as follows

 “tidal water” has the meaning assigned to it in clause (49) of section 3 of the Merchant Shipping Act, 1958.

Section 3(49) of the Merchant Shipping Act, 1958 defines the words ‘tidal water’ as follows –

‘tidal water’ means any part of the sea and any part of a river within the ebb and flow of the tide at ordinary spring tides and not being a harbour.

GST Exemption on Service of Specified goods transport by vessel within India 

Services by way of transportation by rail or a vessel from one place in India to another of the following goods is exempt from GST –

(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap

(b) defence or military equipments

(c) newspaper or magazines registered with the Registrar of Newspapers

(d) railway equipments or materials

(e) agricultural produce

(f) milk, salt and food grain including flours, pulses and rice; and

(g) organic manure

[ Refer Sr No 20 of table of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017 effective from 1-7-2017.]

GST on Inward ocean freight from out of India

In case of inward ocean freight i.e. service supplied by person located in non-taxable territory to a person located in non taxable territory for transportation of goods by vessel from outside India upto customs station is India, the IGST rate is 5%. SGST and CGST cannot apply. The condition of non-availment of ITC is not applicable.

[ Refer Sr No 9 (ii) of table of Notification  No. 8/2017-Integrated Tax (Rate) dated 28-6-2017, effective from 1-7-2017]

In case of outward sea transport of goods, GST is not applicable as place of supply is outside India.

Where the value of taxable service provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is not available with the person liable for paying integrated tax, the same shall be deemed to be 10% of the CIF value (sum of cost, insurance and freight) of imported goods. [ Refer Point 4 of Notification  No. 8/2017-Integrated Tax (Rate) dated 28-6-2017, effective from 1-7-2017]

GST on Reverse charge basis on inward ocean transport from out of India

In case of service of inward ocean transport supplied by a person outside India, the importer receiving the service is liable to pay GST.

[ Refer Sr No 10 of table of Notification No. 10/2017-Integrated Tax (Rates) dated 28-6-2017, effective from 1-7-2017 which says IGST shall be paid on reverse charge basis by the recipient of the such services ( Importer, as defined in section 2(26) of the Customs Act, 1962(52 of 1962), located in the taxable territory )  In case of services supplied by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India.

GST on Air transport service of goods

Air transport service of goods falls under group 99653.

Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of clearance in India is exempt from GST – [ Refer Sr No 19  of table of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 and Notification No 9/2017-Integrated Tax (Rate)  dated 28-6-2017 effective from 1-7-2017 ] .

“aircraft” has the same meaning as assigned to it in clause (1) of section 2 of the Aircraft Act, 1934 (22 of 1934); [ Refer Point 2(f ) of Notification No 12/2017 Central Tax (Rate) dated 28-6-2017 ]

In case of outward air transport of goods, GST is not applicable as place of supply is outside India.

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