Goods Transport Agency under GST & GST on Transportation

Tally Solutions |Updated on: August 23, 2021

• Goods Transport Agency (GTA) Services in India
• What Is Goods Transport Agency (GTA)?
• Classifying the Services Provided By a GTA Operator
• What is a consignment note?
• How To Identify A Consignment Note
• GST On Transportation Charges
• Issues: GST On Transportation Charges in Invoice
• How To Add Transport Charges in GST Invoice Tally

Goods Transport Agency (GTA) Services in India

The most commonly used form of goods transport in India is via road. The data from the National Highways Authority of India, about 65% of freight and 80% of passenger traffic are carried by the roads.

Transportation of goods by road is done by transporter or courier agency. This article will discuss the transporter, i.e., The GTA.

What Is Goods Transport Agency (GTA)?

Goods Transport Agency (GTA) means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

It is to be noted here that, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA.

Classifying the services provided by a GTA operator

Road transportation services or any related service, such as loading, unloading, packing, unpacking, etc. falls under the services provided by Goods Transport Agency but provided a consignment note is issued by such operator in respect of each of services provided by him.

What is a consignment note?

A consignment note is a document regarding the carriage of goods by road which declares the contract of carriage and includes the instructions given to the carrier and proves the contract of carriage.

How to identify a consignment note

• Serial Number
• Names of the consignor and consignee
• Registration number of the carriage used for transport of goods
• Details of the goods transported
• Place of origin and destination
• Person liable for paying tax

GST on transportation charges

Issues: GST On transportation charges in invoice

1. a) GST Transport charges on GST should be charged on the total taxable value i.e., including the Freight Charges.
2. b) The rate applicable on GST Transport Charges: Freight charges/Freight forwarding added to Invoice should be charged at such rates applicable for the goods or services. For example: if the goods transported in GST is a goods falling under 5% slab then the Freight charges will also be charged at the same rate.
3. c) Who is to pay transport charges under GST? It is to be understood here that the person who pays Freight is the recipient of service. But the assessment of two situations makes it clear about the taxability of GST on transportation charges.

1. d) Who must bear the GST on transportation charges: This is based on the following 2 scenarios: Recipient belongs to the specified category of persons, Or Recipient does not belong to specified category of persons.

Specified Category persons

When a Goods Transport Agency (GTA), whether registered or unregistered, provides taxable transportation or related services to any of the specified persons, the recipient of the service is liable to pay tax on reverse charge basis. These specified persons are :

• A person registered under GST
• A factory registered under or governed by the Factories Act, 1948
• A Society registered under Societies Registration Act, 1860 or under any other law for the time being in force in any part of India
• A co-operative society established by or under any law
• A body corporate established by or under any law
• A partnership firm, whether registered or not under any law, including an association of persons
• A casual taxable person

Note 1: All the persons specified above are mandatorily required to register under GST, irrespective of their turnover, as they are liable to pay tax on reverse charge basis.

Note 2: Any person in the above list of specified persons who pay tax on reverse charge basis on transportation service received from a GTA, is eligible for full input credit of the tax paid.

Non- specified Category persons

These are :

• Unregistered Sole Proprietor
• Unregistered HUF (Hindu Undivided Family)
• Unregistered BOI (Body of Individuals)

Note :

• When a registered GTA provides transportation service to any of these persons, the GTA is liable to pay tax on the supply
• This is applicable only when the GTA is registered
• If the GTA is also unregistered, there will be no tax liability on the GTA or the recipient
• In such cases, where a registered GTA is liable to pay tax @ 5% on transportation service, 2 options have been given to them:
  • Pay tax @ 5% with no input tax credit
  • Pay tax @ 12% with full input tax credit

1. e) Treatment when GST Transport Charges is added in the invoice by the supplier of goods or Services: GST will be calculated on the total taxable value (including Freight charges).

Beside CGST law on Value of supply says that taxable value to mean transaction value which includes.

• Any taxes, duties, cesses, fees & charges levied under any law other than GST law if charged separately by the supplier
• Any Amount -Liable to Pay – Supplier-Incurred By – Recipient and-Not included in the price actually paid or payable for the supply
• Incidental expenses i.e. Packing & Commission etc.
• Interest, Late Fee or Penalty for delayed payment
• Subsidies provided by the State or Central Government

How To Add Transport Charges in GST Invoice TallyPrime