GST Impact on Goods Transport Agency

Transportation of goods plays a significant role in the growth of the economy. Transportation cost adds to the cost of goods produced and mark up to profit to sale in the market which means it also affects the market price of the product.

Goods are transported through three modes by air, water, and Road. Goods transported through Road are further bifurcated based on means of transportation i.e, Rail and Goods Transport Agency.

Here we are discussing services provided by Goods Transport Agency in India.

Meaning of Goods Transport Agency (GTA)

The person who provides services related to transport of Goods by road and issues consignment note also called “bilti” in common parlance. They may have their own trucks or takes on hire basis and issues bilti.

The requirement of registration under GST by GTA:

1. If GTA provides services to specified persons.

A GTA who provides services only to the “specified persons” who are liable to pay tax on a reverse charge, is not required to register under GST. It means even if the annual turnover of the GTA exceeds the threshold limit as per CGST Act, they are not required to register under GST

Here, Specified Person means

A Person registered under GST
A Factory registered under or governed by the Factories Act, 1948
A Society registered under Societies Registration Act, 1860 or under any law
A Co-operative society established by or under any law
A body corporate established by or under any law
A Partnership firm, whether registered or not under any law, including association of persons
A casual taxable person

2. If GTA provides services to all (registered, unregistered or specified persons)

A GTA who provides transport services to all whether specified or not has to take registration under GST when its aggregate turnover exceeds the threshold limit as per CGST Act.

Non specified persons basically are sole proprietors, HUF (Hindu Undivided Family), unregistered Body of an individual, household for personal use etc.

GST Rates structure on services provided by Goods Transport Agency:

GTA has to opt at the beginning of financial Year whether to avail ITC or not

Where GTA is opting to “NOT TO AVAIL ITC ” are liable to tax at 5% with no Input tax credit
Where GTA is opting to “TO AVAIL ITC” are liable to tax at 12% with no Input tax credit.

Following are the exempt services provided by a goods transport agency, by way of transport in a goods carriage of,-

(a) Agricultural produce;

(b) Goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;

(c) Goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;

(d) Milk, salt and food grain including flour, pulses, and rice;

(e) Organic manure;

(f) Newspaper or magazines registered with the Registrar of Newspapers;

(g) Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

(h) Defence or military equipment’s

Procedure for transportation of goods

1. For Registered GTA’s

The registered transporter who accounts for the movement of goods of consignment value which is more than Rs. Fifty thousand in connection with the supply or for reasons other than supply or as a result of inward supply from an unregistered person shall, before initiation of movement, obtain an e-way bill in order to let coherent transportation of goods within India.

The person in charge of a vehicle or say the truck driver shall carry:

1. The invoice or delivery challan, as the case, maybe; and
2. A copy of the e-way bill or the e-way bill number

2. For unregistered GTAs

All unregistered GTAs should enroll as a GTA in GST portal using Form GST ENR-01. After enrolment, a unique enrolment number will be issued to such GTAs. Using this enrolment number, unregistered GTAs can generate an e-way bill from the GST portal.

Positive impact of GST on Goods Transport Agency

GST implementation on GTA has facilitated removal of Check posts and octroi of multiple states. It has reduced the transit time of trucks and smoother trucking in India. Hopefully in future GST compliances will provide the entire transport infrastructure more streamlined platform and will prove to be advantageous in terms of restructuring for the entire industry.

Note – Please note that the above article is for education purpose only. This is based on our interpretation of laws which may differ person to person. Readers are expected to verify the facts and laws.