Supply of Services by Goods Transport Agency (GTA) under GST

Introduction

Goods Transport Agencies (GTAs) are vital facilitators in India’s supply chain and logistics sector. Under the GST regime, GTA services are subject to unique tax rules, particularly involving the Reverse Charge Mechanism (RCM). This article comprehensively explains the GST implications for GTA services, including tax rates, exemptions, invoicing, registration, and FAQs relevant for transporters, recipients, and consultants.

What is a Goods Transport Agency (GTA)?

As per GST law, a Goods Transport Agency (GTA) is defined as:

“Any person who provides service in relation to transportation of goods by road and issues a consignment note, by whatever name called.”

This means:

• A person becomes a GTA only if a consignment note is issued.

• Mere ownership or operation of a goods vehicle without issuing a consignment note does not qualify as GTA.

  
  

Taxability of GTA Services under GST

There are two routes for taxing GTA services:

1. Reverse Charge Mechanism (RCM)

By default, GTA services are taxed under reverse charge, where the recipient pays GST instead of the GTA. This is governed by Notification No. 13/2017 – Central Tax (Rate).

RCM is applicable if the recipient is:

• A factory under Factories Act

• A society

• A cooperative society

• A body corporate

• A partnership firm (including LLP)

• A registered person under GST

If the above recipient pays freight to a GTA, they are liable to pay 5% GST under RCM.

2. Forward Charge – Optional Route

A GTA can opt to pay GST on its own (forward charge) instead of shifting the liability to the recipient. The rates applicable under forward charge are:

GST Rate	Input Tax Credit (ITC)
5%	Not allowed
12%	Allowed

Once opted, this must be followed for the entire financial year.

Exemptions Available for GTA Services:

As per Notification No. 12/2017 – Central Tax (Rate), GTA services are exempt in the following scenarios:

• Transport of agricultural produce

• Milk, salt, food grains (including rice and pulses)

• Newspaper and magazines registered with Registrar of Newspapers

• Defence or military equipment

• Relief material for disasters

• Consignment value up to ₹1,500

• Individual consignment value not exceeding ₹750

If the transport is done without a consignment note, it’s considered exempt, not GTA service.

Registration Requirements for GTA

• Not required to register if exclusively supplying services under RCM (Notification No. 5/2017).

• Mandatory registration if opting for forward charge, regardless of turnover.

• Recipients liable under RCM must be registered under GST.

Time of Supply for GTA Services under RCM

As per Section 13(3) of the CGST Act, the time of supply (for services under reverse charge) is the earlier of:

• The date of payment (book entry or bank debit), or

• 60 days from the date of invoice

  
  

Invoicing Requirements

By GTA (when under RCM):

• Invoice should state: “Tax payable under reverse charge.”

• Must include:

  • Consignment note number

  • Names of consignor and consignee

  • Registration number of vehicle

  • Origin and destination

  • GSTIN of the party liable to pay

By Recipient (under RCM):

• Must issue:

  • Self-invoice under Section 31(3)(f)

  • Payment voucher under Section 31(3)(g)

Input Tax Credit (ITC) on GTA Services

• ITC on GST paid under RCM is available to the recipient, provided the service is used for business.

• GTA opting for 5% forward charge cannot claim ITC.

• GTA opting for 12% forward charge can claim full ITC.

Ancillary Services and Composite Supply

Services like:

• Loading and unloading

• Packing/unpacking

• Transhipment

• Warehousing during transit

are treated as part of the GTA service if included in the GTA's invoice. They are taxed under the same rate as GTA services.

If billed separately, they will be treated as independent taxable services.

Record-Keeping Requirements

As per Rule 56 of CGST Rules, every GTA must maintain:

• Consignment-wise details

• GSTIN of consignor and consignee

• Branch-wise transport and storage details

Failure to maintain such records can result in penalties under Section 122 of the CGST Act.

Frequently Asked Questions (FAQs)

Q1. Do I need to register under GST if I own a truck but do not issue consignment notes?

No. You are not a GTA in such case. Services by a non-GTA are exempt.

Q2. Can a GTA opt for forward charge mid-year?

No. The option to pay tax under forward charge must be exercised at the beginning of a financial year.

Q3. Is GST applicable if I pay freight to a GTA for transporting milk or food grains?

No. GTA services for specified essential items like milk, food grains, etc., are exempt from GST.

Q4. Can the recipient of GTA services claim ITC on RCM?

Yes. If the service is used for business, ITC is available even when tax is paid under reverse charge.

Q5. What if ancillary services like loading or transhipment are charged separately?

They will be treated as separate taxable supplies, not part of the GTA composite service.

Q6. Are GTA services exempt if the consignment value is less than ₹1,500?

Yes. If the total consignment value per consignment is ₹1,500 or less, the service is exempt.

Q7. If I am a partnership firm receiving services from an unregistered GTA, am I liable under RCM?

Yes. If the GTA issues a consignment note, your firm is liable to pay tax under RCM.

Conclusion

Understanding the nuances of GTA service taxation under GST is essential for transport operators and businesses alike. The tax liability depends on whether the GTA opts for forward charge or the recipient pays under RCM. Proper documentation, invoicing, and compliance are critical to ensure ITC eligibility and avoid penalties.

Whether you're a single truck owner or a large logistics firm, aligning your GST practices with these provisions is key to smooth operations and regulatory compliance.

Need help managing your GTA compliance or GST filings?

Reach out to our expert team for end-to-end GST consultancy and compliance support.

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