Transportation services & its GST implication

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Transportation services & its GST implication

Transportation services is vital part of country & for every business. We cannot imagine     

 business without transportation services. Even though Government has deferred Reverse    

 charged mechanism of section 9(4) of the Act, but we still required to pay GST on  

 Transportation services under reverse charged mechanism in terms of section 9(3).

I have already covered “What are the types of Transportation & its place of supply” in my previous article. For more detail you can refer article…..

According to Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 (Sr.no.18), the following services are exempt from GST

Services by way of transportation of goods (Heading 9965)-

(a) by road except the services of—

(i) a goods transportation agency;

(ii) a courier agency;

(b) by inland waterways.

Thus, it is to be seen that mere transportation of goods by road, unless it is a service rendered by a goods transportation agency, is exempt from GST.

For the purpose of Act, What is Goods Transport Agency (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

Who are liable to pay GST under reverse charged mechanism?

As per Notification No. 13/2017- Central Tax dated 28/06/2017 the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the receiver of service.

(a) Any factory registered under or governed by the Factories Act, 1948 (63 of 1948); or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or

(e) a body-corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person.

What services will be included in GTA?

There are no specific services defined in the act, but in general or common parlance following services should be considered as a part of Goods Transport services.

  • Loading/unloading
  • Packing/ unpacking
  • Trans-shipment
  • Temporary warehousing etc.

What are the rates for transportation services?

Service by a GTA GST rate
Any other goods 5% No ITC 

OR

12% with ITC

Used household goods for personal use 0% (as per-2)
Transporting goods of unregistered persons 0% (as per-2)
Transporting goods of unregistered casual taxable persons 0% (as per-2)
Transporting goods (GST paid by GTA) (as per-1) 5% No ITC

or

12% with ITC

Transporting goods of 7 specified recipients (as per-1) 12% with ITC (paid by GTA)

Or

RCM 5% with ITC

Hiring out vehicle to a GTA 0%
  1. As per Notification No. 20/2017-Central Tax (Rate) 22nd August, 2017
  2. As per Notification No. 32/2017- Central Tax (Rate) dated 13th October, 2017

Thus, if in books of accounts any nomenclature of accounts like loading/ unloading charges then businessman is required to pay GST under RCM on the basis of rate list mentioned above.

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