Whether all Transporter of Goods are Goods Transport Agency and liable to reverse charge mechanism (RCM)?

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Whether all Transporter of Goods are Goods Transport Agency and liable to reverse charge mechanism (RCM)?

Whether all Transporter of Goods are Goods Transport Agency and
liable to reverse charge mechanism (RCM)?

 

There is some fluster between Goods transport Agency and Goods transport by Road. But there is a thin line of difference between the two terms, which can differ the tax treatment.

We will focus on the following terms:

  1. What is GTA
  2. What is Consignment Note
  3. Taxability of Services
  4. Rates of GST

What is GTA :

The definition of GTA is provided under clause (ze) of notification no. 12/2017-Central tax (Rate) as:

“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.”

 

From the above definition, it can said that if Goods transporter is issued the consignment note then only he will fall under the category of Goods transport agency otherwise not. Consignment note is mandatory for goods transport agency.

What is Consignment Note:

  • In simple terms, a consignment note is a document which is issued by a goods transport agency against the receipt of goods for the purpose of transport by road in a goods carriage. 
  • It contains the name of the consignor and consignee, the registration number of the goods carriage in which goods are transported etc.

 

Taxability of Services:

Services by way of transportation of goods are exempt:

  1. By road except for the services of
    • a goods transport agency
    • a courier agency
  2. By inland waterways

Thus transportation of goods by road, if it is a service rendered by goods transport agency is taxable under GST.

Rate of GST for services:

SL. NO

               SERVICES BY GTA

RATE

1

Carrying:

§  Agricultural Produce

§  Milk, salt, and food grains including flour, pulses, and rice

§  Organic manure

§  Newspaper and magazines registered with the registrar of newspapers

§  Relief material meant for victims of natural or man-made disasters

§  Defense or military equipment

0%

2

To an unregistered person, including an unregistered casual taxable person

0%

3

Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use)

5% with no ITC

OR

12% with ITC

4

Goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees

0%

5

Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty

0%

6

By way of giving on hire to a goods transport agency, a means of transportation of goods

0%

 

So, on every transaction you need to ensure that whether it is fall under  GTA category or such service is exempt.

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