Transportation is the backbone of a business and a vital part of the economy. Taxes on transportation have a far-reaching impact on all businesses. Hence, the increase in transportation taxes has always sparked a hot debate among people, and nation-wide transport strikes, putting the economy into a deadlock.
Levying taxes on transport authorities is not a new concept. Even before the implementation of GST, there was a reverse charge basis taxation against which the recipient of the service was responsible for the tax payment. The rule has remained unchanged, with a few changes under Section 9, cgst act.
Goods Transportation In India
Roadways are the primary transportation service accounting for more than the rest of the methods combined. Other than this, some goods are transported by railways or inland waterways. On-road goods transportation is mainly done by a Goods Transport Authority (GTA) or by a courier agency.
Transportation Services Exempt From GST
The following modes of goods transportation are exempt from GST:
- Inland waterways transportation services
- All roadways services except GTA and courier delivery
What is GTA?
Under Central Tax Rate notification, GTA refers to a roadways transporter who issues a consignment note with the following details:
- Name of consignee and consignor
- Registration number of transport vehicle
- Details of the package
- Place of origin and dispatch
- Person liable for payment of GST
Always make sure to do a gst number check online to avoid discrepancies while filing tax return forms.
Services You Can Avail From GTA
- Temporary warehousing
Is GST required for GTA?
If you are a GTA, you may not need to register for GST on condition that you exclusively transport goods, and the total tax is charged on the recipients via reverse charges. Furthermore, if the total taxable amount is less than INR 20 lakhs, the GTA does not need to register for GST.
Reverse Charge Mechanism (RCM) On GTA Services
Under GST, the following people are responsible for paying the taxes for GTA services under the reverse charge mechanism:
- Factory registered under the Factories Act, 1948
- Any place under the Societies Registration Act, or any other law in place
- Lawfully established Co-operative societies
- People registered under any GST Act
- A GST Registered person
- A corporate body under the law
- Any partnership firm
- Any casual taxpayer
If the sender pays the GTA, s/he is a recipient of the services; otherwise, freight payment is the liability of the receiver, and they become the recipient of the transportation services. If the recipient belongs to the categories mentioned above, they are liable to pay GST by reverse charge means.
However, if the GTA is unregistered, s/he will only be able to avail RCM on a small list of supplies.
GTA Tax Rates
In the unfortunate event that GTA still needs to pay for the taxes on the goods s/he has delivered, s/he can either opt for 5% GST (2.5% CGST and 2. 5% SGST), without Input Tax Credit or ITC or choose 12% GST (6% CGST and 6% SGST) with ITC.
Transportation by railways is charged with 5% GST allowing ITC.
GST on Interstate Transportation of Goods
For interstate transport, GST depends on the place of supply of services.
- For registered people, their registered locations can be considered as the place of service supply.
- For unregistered people, the place where the goods are handed over is the place of supply.
If the GTA is from a different state than the place of supply, then IGST will also be added to SGST and CGST.
GST Exemption On GTA
- Transporting agricultural producers, milk, salt, and food grains
- Organic manure
- Newspapers and Magazines registered with Registrar of Newspapers
- Relief measures for disaster victims
- Military defence equipment
- For single carriage consignment delivery under INR 1500.
- For delivery of goods where the total consignment for a consignee does not exceed INR 750.
- Used household goods for personal use
- Hiring out a vehicle to a GTA
How GTA Can Prepare GST Invoice
While preparing a GST invoice, you must include the following along with the details of the consignment note.
- Gross weight
- Date of issue
- GSTIN of the taxpayer along with whether it is RCM
- Details of GTA along with GSTIN
- Tax invoice number with the amount and applicable rate of GST divided between CGST, SGST, UTGST, and IGST.
- Signature of the supplier
Filing GST For GTA
If all of the services fall under RCM, there is no need to register. However, if you are registered, then you need to fill up GSTR-1 for sales, GSTR-2 for purchases, and pay your taxes along with GSTR-3.
Transport is the lifeline of a business. GST gave the transport sector a new lifeline. Do proper research on the different rules of transport in different states before you start a business.