Comprehensive Discussions on GTA

Transportation plays an important role for survival of the business, as for the supply of goods every business needs the transportation facility. The transportation of goods can be done through various routes like land route, sea route and air route. In this article we are going to discuss about the transportation of goods through land route by goods transport agency (GTA), GST implications on GTA, exemptions and applicable rates of tax for GTA which is the most popular form of goods transport in India.

Before going into detailed discussion let’s first understand who is GTA. The definition of Goods Transport Agency is not given under section 2 of CGST Act 2017. The clause (xxxx) of explanation given under Notification No. 11/2017 CT(R) defines the GTA as follows;
“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”.

Thus from the definition of GTA it is clear that any person who issues consignment note and provides service in relation to transport of goods by road, is to be considered as a GTA. Thus, issuance of consignment note is an essential condition to be considered as a GTA.

Under GST law there is an exemption provided in serial number 18 of Notification No. 12/2017 CT(R) in respect of services of transportation of goods subject to some exception. The said serial number 18 of Notification No. 12/2017 CT(R) is laid down as follows;

Thus from the above exemption entry, it is clear that services of transportation of goods by road by goods transport agency and by courier agency would not be exempted under GST and tax would be leviable on such transaction. Further, it is important to know that some services provided by GTA in relation to transportation of goods are also exempted under GST. The details of such services are given under serial number 21, 21A & 21B of Notification No. 12/2017 CT(R). Which are as follows;

Accordingly, the above services provided by GTA are exempt from GST and the other services provided by GTA in relation to transportation of goods would be chargeable to GST.
As per Notification No. 11/2017 CT(R), the GTA has the option to pay the tax under Forward Charge or GTA can select the option of tax applicable under Reverse Charge.

If GTA has opted to pay tax under forward charge then he has two options for charging rate of tax i.e., 5% or 12%. If GTA has selected the option of charging 5% then GTA would not be eligible to claim ITC in respect of any taxes paid by him on any purchases or expenses. However, if GTA is charging tax @ 12% in their invoices then ITC would be eligible for GTA. However, if GTA has not opted to pay tax under forward charge than in such case RCM would be applicable on recipient and tax @5% is to be deposited by the recipient on services received from GTA.

Let’s summarised the applicable rate of tax and ITC eligibility for GTA with the help of following table;

The other important aspect that needs to be covered here is that GTA is exempted from complying with e-invoicing requirements. The Notification No. 13/2020 CT dated 21.03.2020 notifies registered person, other than a government department, a local authority, a Special Economic Zone unit and those referred to in sub-rules (2), (3), (4) and (4A) of rule 54 of the said rules, whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds five crore rupees, as a class of registered person who shall prepare invoice and other prescribed documents, in terms of sub-rule (4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person or for exports.

Rule 54 of CGST Rules 2017 prescribes the contents of tax invoices in special cases like Rule 54(1): Issuance of tax invoice by ISD , Rule 54(2): Issuance of tax invoice by Banking companies, Rule 54(3): Issuance of tax invoice by Goods Transport Agency, Rule 54(4): Issuance of tax invoice by Passenger transportation service and Rule 54(4A): Person supplying services by way of admission to exhibition of cinematograph films in multiplex screens.

As GTA is covered under Rule 54(3), hence GTA should prepare tax invoice having detailed prescribed under Rule 54(3) and the e-invoice notification would not be applicable on GTA.

Further Rule 46 of CGST Rules provides that declaration is required to be added in tax Invoices being issued by the GTA for non-applicability of e-invoice on account of exemption provided in the Rule 48(4) of CGST Rules, 2017.“I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.” Hence, any GTA not required to issue e-invoice even having aggregate turnover exceeding the prescribed limit in any F.Y. 2017-18 onwards shall be required to mention the above declaration while issuing tax invoices to its customers.

Conclusion: GTA has the option to pay the tax under Forward Charge or GTA can select the option of tax applicable under Reverse Charge. If GTA has opted to pay tax under forward charge then he has two options for charging rate of tax i.e., 5% (without ITC) or 12% (with ITC). However, if GTA has not opted to pay tax under FCM than in such case RCM would be applicable on recipient and tax @5% is to be deposited by the recipient on services received from GTA and such recipient would be eligible to claim ITC.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.