Goods Transport Agency under GST and the Rates Applicable

This article has been updated as per the GST Council’s decision to exempt transportation service provided by a GTA to unregistered persons.
Transport of goods by road is the most commonly used mode of transportation for businesses which supply goods. This transportation by road is facilitated either by a Goods Transport Agency (GTA) or common carriers such as autorickshaw or courier agencies. In this blog, we will understand what is meant by a Goods Transport Agency (GTA) and the GST rates for transportation service provided by a Goods Transport Agency. This is the first blog in the series wherein, we will understand the various tax provisions with respect to services provided by Goods Transport Agencies and the tax impact on persons taking their services.

Who is a GTA?
A GTA is basically any person who provides services in relation to transport of goods by road and issues a consignment note, commonly called as Lorry Receipt (LR). Hence, a person who provides the service of transportation of goods by road or any related service, such as loading, unloading, packing, unpacking, etc. can be considered as a GTA if the person issues a consignment note. Issuing of a consignment note or LR to the person taking the transportation service is integral for a person to be considered as a GTA. A copy of this consignment note will be sent to the consignee which gives the consignee the right to receive the goods from the GTA. The issue of a consignment note is what differentiates a GTA from a regular transporter. A regular transporter who can issue any document for the transportation service, except the consignment note.
A consignment note issued by a GTA should contain the following details:

1. Should be serially numbered
2. Names of the consignor and consignee
3. Registration number of the carriage used for transport of goods
4. Details of the goods transported
5. Place of origin and destination
6. Person liable for paying tax

GST on GTA services
The GST rates for transportation services provided by a GTA are given below:

Exempt

• Transport of agricultural produce

• Transport of milk, salt, food grains including rice, flour, pulses

• Transport of organic manure

• Transport of newspapers or magazines registered with the Registrar of Newspapers

• Transport of relief materials for victims of natural or man-made disasters, calamities, accidents or mishaps

• Transport of defence or military equipment

• Transport of any goods, where the gross amount charged for transportation for a consignment transported in a single carriage is less than Rs. 1,500

For example: Raj Logistics, a GTA, provides transportation services to Manish Apparels, a registered dealer. On 15th September, 2017, Manish Apparels sends a batch of apparel to a dealer, Rakesh Designs. Raj Logistics transports the batch of apparel in a single vehicle and they charge Rs. 1,000 as freight for this.
Here, the batch of apparel is transported in a single vehicle and the value of transportation charges charged by Raj Logistics does not exceed Rs. 1,500. Hence, no tax is payable on the transportation service.

• Transport of any goods, where the gross amount charged for transportation of goods for a single consignee is less than Rs. 750

For example: Raj Logistics transports a batch of apparel on behalf of Manish Apparels to Rakesh Designs. It is transported in 2 different vehicles along with other goods. Raj Logistics charge Rs. 700 as freight for this.
Here, the batch of apparel is transported in 2 different vehicles but to the same consignee, that is, Rakesh designs, and the value of transportation charges charged by Raj Logistics does not exceed Rs. 750. Hence, no tax is payable on the transportation service

5%

Transportation of goods other than the above
 
For example: Raj Logistics transports a batch of apparel on behalf of Manish Apparels to Rakesh Designs. The batch is transported in a single vehicle and Raj Logistics charges Rs. 2,000 as freight for this.
Here, the batch of apparel is transported in a single vehicle and the value of transportation charges charged by Raj Transports exceeds Rs. 1,500. Hence, tax @ 5% is payable on the transportation service.

Note that with effect from 13th October, ’17, transportation service provided by a GTA to an unregistered person is exempt from GST.
Now that we have understood who a GTA is and the GST rates for transportation service taken from a GTA, in the next blog, we will learn who will be liable to pay tax: is it the GTA or the service receiver.
Upcoming blogs:
Tax liability on GTA and eligibility of Input tax credit
Impact on registration for GTA and person taking services of GTA