Applicability of GST on Goods Transport Agencies (GTA)

Published By Avalara India, 27 Sep 2017

Applicability of GST on Goods Transport Agencies (GTA)

The transportation industry plays a pivotal role in the development of a nation’s economy. In fact, the progress of a nation and the progress of its transportation industry are complementary.

The same holds true for India, where the road transport industry has had the lion’s share of influence on India’s economic development. More recently, the industry has been in the limelight regarding the new Goods and Services Tax (GST), which is applicable on freight charges involving goods transport agencies (GTA).

The question arises whether charging  tax on this industry is a new concept. The answer is, no. In the previous law, services provided by GTA (i.e. transport of goods by road service rendered by a GTA) were liable to a service tax on a reverse charge basis, where the person receiving the service was responsible for payment of tax.

In the GST regime, the same legal position prevails, but the scope of the tax has been widened.

Meaning of GTA

GST laws define GTA in notification no. 12/2017-Central Tax (Rate) dated 28.06.2017), which states that, ‘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, the transporter must issue a consignment note in order for a service provider to be considered a GTA. If the transporter does not issue a consignment note, the service provider will not come within the ambit of GTA.

Services not provided by GTA not under the purview of GST

In the same notification mentioned above, the following services were exempted from GST:

(a) Services by way of transportation of goods by road, except the services of:

(i) a GTA

(ii) a courier agency

(b) Services by way of transportation of goods by inland waterways

Thus, only transportation services rendered by a GTA.....
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