GST on GTA, GTA under GST Regime, Applicability of GST on GTA

GST on GTA, GTA under GST Regime, Applicability of GST on GTA. GST under reverse charge on Goods Transport Agency (GTA). we would like to reiterate that the CAknowledge.com always supported Government of India in all its growth initiatives. we are prepared to extend their contribution to ensure the successful transition and implementation of GST. Taxability of Goods Transport Agencies (herein after referred as GTA) under GST era, will have a lots of confusion. So we are discussing the relevant provision and relevant notification issued till Dec’18 in detail.

Who is Goods Transport Agency (GTA) –

As per Para 2(ze) of Notification No 12/2017 – Central Tax (Rate) dated 28th June 2017  “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.

New Update

Normal charge on GTA service when opted to pay central tax @ 6% with full ITC

Central Government vide Notification No. 22/2017-Central Tax (Rate), dt. 22-08-2017 has provided that the goods transport agency opting to pay central tax @12% (CGST @6% and SGST @6%) to avail full ITC in respect of transportation of goods by road needs to pay the tax under normal charge. However, service provided by goods transport agency to specified categories of recipient on which GTA has opted to pay central tax at the rate of 5%( CGST @2.5% and SGST @2.5% ) with non availment of input tax credit charged on goods and services used for providing such GTA service need to pay tax under reverse charge.

It has further been provided that Limited Liability Partnership formed and registered under the provision of Limited Liability Partnership Act,2008 will be considered as partnership firm. Therefore, when GTA provides services to LLP then being specified recipient LLP would be liable to pay tax under Reverse Charge. [Notification No. 22/2017-Central Tax (Rate), dt. 22- 08-2017]

GTA Service – Exempt Supply

GTA Service will be exempt in following three cases – 

  • Transportation for Specified purpose/goods – Refer below Point No 4
  • Recipient is not of 7 specified category – Refer below Point no 5

Transportation of Goods by road other than GTA – Refer below point no 6

Will the GTA Service be always under Reverse Charge

From 22nd August 2017 vide Notification No 22/2017 Central Tax Rate, if GTA want to opt the forward charge/normal charge then he can opt provided such GTA has to charge the GST @12% (or 6% CGST +6% SGST).

Otherwise the GTA Service will fall under reverse charge subject to the condition that recipient should be one out of 7 specified category.

Rate of Tax

  1. Forward/Normal Charge – GTA will charge GST@ 12%
  2. Reverse Charge – Recipient will pay the tax @5% and eligible to take full input tax credit subject to the other condition of Sec 16 to 18 of CGST Act.

Service Accounting Code – Transportation of Goods by Road will have the SAC Code 9965 or 9967

Which Tax will be paid under Reverse Charge on GTA – IGST or CGST & SGST / UTGST

Please note that which tax need to be deposited is depends on two factors i.e. the location of Supplier (LOS) and Place of Supply (POS).

If LOS and POS are in same state/ Union Territory (UT) then the supply will be intra state (Section 8 of IGST Act) and CGST & SGST will be paid by the registered recipient under RCM.

Vice versa If LOS and POS are in two different state or two different Union Territory or in one state ot one UT then the supply will be interstate (Section 7 of IGST Act) and ICGST will be paid by the registered recipient under RCM

Location of Supplier will be determined as per Section 2(71) of CGST Act and Place of Supply for transportation of goods by road is determined as per Section 12(8) of IGST Act which says that location of recipient if the service is provided to registered person.

Let take an example that Mr A is a registered person in Delhi and have purchased goods from Rajasthan. Goods are transported by road to Delhi by a transporter of Rajasthan. Therefore we can say that Location of Supplier is Rajasthan.

Now the recipient (being Mr A, as he is liable to pay the freight) is of Delhi. Therefore Place of Supply as per Section 12(8) is Delhi being the location of the recipient.

Therefore it is an Inter State Supply as per Section of 7 of IGST Act and Mr A will pay IGST under Reverse Charge.

GST under reverse charge on Goods Transport Agency (GST on GTA)

Coverage:

  • Who is responsible to pay GST under GTA
  • Input Credit is available or not
  • Registration Requirement
  • Exemption to Service Provider and Recipient

Before understanding this we will have to understand the sub section 3 of section 9 of CGST Act. Which provide us that central government, on the recommendation of the council, by notification, may specify the category of Goods or Services or Both on which tax shall be paid on the basis of Reverse Charge.

Qus: Who is responsible to pay GST under Reverse charge?

Ans: Following person shall be responsible to pay GST under Reverse Charge Basis:

  1. Any Factory registered under Factory Act.
  2. Any Society registered under Society Act.
  3. Any co-operative society registered under any law.
  4. Any person who is registered under SGST/CGST/UGST Act.
  5. Any Body Corporate.
  6. Any partnership whether registered or not including AOP.
  7. Casual Person under GST

Note: It should be noted that Individual/ Proprietorship Firm/HUF, who is not registered under SGST/CGST/UGST, are not covered in the above category. It means if such person avails the service of GTA then GST shall be paid by GTA itself.

Qus: Whether Input Credit will allow or not?

Ans: Yes, Input Credit will be allow to Recipient since GST shall be payable on RCM basis.

Qus: What are the registration criteria for GTA under GST?

Ans: Notification No-5/2017 of central tax, as per section 23(2) of CGST Act, 2017 Central government hereby specifies the persons who are only engage in the supply of goods or services or both over which total tax is paid on reveres charge basis by recipient of such goods of services or both under section 9(3) of said Act, such category of person shall be exempt from obtaining registration.

Analysis:

  • In other words, if any person supplies goods or services or both on which RCM is applicable then such person shall be exempt from obtaining registration under GST. It should be noted that if such person also supplies any goods or services or both on which RCM is not applicable than such person shall be required to obtain registration on the basis of aggregate turnover limit i.e. 20 Lakhs.
  • Let’s suppose in case of GTA, if such person provides services to only specified persons referred above, other than unregistered Individual/ Proprietorship Firm/HUF, then such GTA shall be exempt from obtaining registration. But if he provides services to unregistered Individual/ Proprietorship Firm/HUF as well then registration will be required on the basis of aggregate turnover limit because in case of unregistered Individual/ Proprietorship Firm/HUF, GTA will be responsible to pay tax.
  • Here we should keep in mind that the law says that “aggregate turnover” means the aggregate value of all taxable supplies, excluding the value of inward supplies on which tax is payable by a person on reverse charge basis, exempt supplies, exports of goods or services or both and inter-state supplies of persons having the same Permanent Account Number, to be computed on an all-India basis but excludes Central tax, State tax, Union territory tax, Integrated tax and cess.
  • It means here we will calculate turnover of GTA, Turnover on which RCM is applicable plus turnover on which he is liable to pay tax, to compute limit of 20 Lakh.
  • There is one thing which we should keep in mind that as per section 24(iii) of GST Act, Registration is mandatory for the person who is liable to pay GST under reverse charge basis.

Qus: In what circumstances GST shall not be applicable on GTA services?

Ans: Exemption is provided to following service provided by GTA by way of transportation of goods carriage of:

  • Agriculture produce milk, salt and food grain including flour.
  • Pulse and rice.
  • Organic Manure.
  • Newspaper or magazine.
  • Relief Material.
  • Defence or military equipment.
  • Where gross amount charged for one consignment transported in single carriage does not exceeding Rs. 1,500/-
  • Where gross amount charged for all goods of single consignee does not exceeding Rs. 750/-

Self-Invoice as per Section 31(3)(f) of CGST Act

As per Section 31(3)(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;

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