GTA – Understand with various question and answers (FAQs on GTA)

FAQs on GTA – As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

This means, while others might also hire out vehicles for goods transportation, 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.

FAQs on GTA

Ajay hired a GTA to transport his goods. The consideration charged was Rs. 1,200.  Will Ajay pay GST?

Ajay will not pay GST under RCM as the consideration for transportation of goods on a consignment
transported in a single carriage is less than Rs. 1,500.

Vinod hired a GTA to transport goods. The GTA was asked to come 2 days as Vinod would receive the goods in batches. The entire consideration was Rs. 600. Will Vinod pay GST?

Vinod will not pay GST because the consideration charged for transportation of all such goods for a
single consignee does not exceed Rs. 750.

Mr. Ajay, a working professional, is moving houses and hires XYZ GTA to transport his household items. XYZ demands Ajay to pay GST under RCM as moving charges are Rs. 6,000. Ajay is confused.

Ans: Ajay is unregistered and if XYZ GTA is also unregistered under GST then, GST is not applicable.

If XYZ is registered, then it will pay GST of 5%. RCM will not apply on Ajay.

Anand, a garments shop owner in Kolkata, hires a truck to deliver goods from wholesaler to his (Anand’s) shop. Anand’s turnover is less than 20 lakhs and he has not registered under GST. The GTA demands that Anand should pay tax under RCM. Anand argues that since he is not registered, he does not have to pay any GST.

Ans: Only the persons above (Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017)
are required to pay GST under RCM. Unregistered dealers (Anand) purchasing goods/services from
unregistered GTA do not have to pay GST under reverse charge mechanism. If the URD hires from
a registered GTA, then the registered GTA is liable to pay GST.

So, Anand is not liable to pay GST under RCM.

Anand now purchases garments from Assam and pays for a truck to deliver the goods to his shop in Kolkata. The GTA says that Anand has to register for GST as he is making an inter- state purchase as only registered dealers can have inter-state trade.

Ans: An unregistered person can make inter-state purchases. For making inter-state sales, he will have to be compulsorily registered.

Since, Anand is an unregistered dealer and the GTA is also unregistered then the concept of RCM does not arise.

The GTA is registered at Assam and its branch is collecting cash in kolkata on his behalf. Recipient of service Anand is in kolkata. If Anand was registered, would he have charged IGST or SGST/CGST under RCM?

If the original transporter in Assam bills Anand, then IGST should be charged. If he bills the branch then SGST/CGST will apply.

Anand has received a one-time contract to sell garments to a dealer in Mumbai. Anand hires a truck to send the goods.

Since, Anand is not registered under GST, he cannot make any inter-state sale. To make an inter- state sale, he must register as a casual taxable person. Then when he hires a truck to send the garments, automatically he is liable to pay GST under RCM.

Anand is sick of all this and decides to voluntarily register. He hires a truck again to transfer goods from the wholesaler to his shop. GTA asks him to pay GST on RCM as he is registered. But Anand’s view is that his turnover is still below 20 lakhs.

Ans: The threshold of turnover does not matter if a person is voluntarily registered. All provisions of GST Act will apply to a registered person. Anand is liable to pay GST under RCM.

Anand’s turnover has increased to 45 lakhs. He wants to shift to composition scheme as he sells mainly to end consumers. But he is worried as his GTA has told him they would not deliver his goods if he is registered under composition scheme as the GTA become liable for GST.

Ans: This is a myth. Even composition dealers are liable to pay GST under RCM. Anand will pay
GST on RCM if he hires a GTA whether he is registered as a composition dealer or as a normal
dealer.